Summary Report of the Board of Directors

Esteemed shareholders,

Welcome to the 88th Ordinary General Meeting of İşbank.

As we present the Board of Directors’ Report, Auditors’ Report and the Profit & Loss Statement showing our 2011-year results for your review and approval, we respectfully greet you all.

While the effects of the global crisis continued to be felt in 2011, the indicators of the Turkish economy looked better than those of many other countries. Although it was observed that the economies of many developed countries encountered several difficulties in their efforts to restart growth, Turkey has been ranked among the world’s fastest-growing economies.

The economic growth, which was 9.6% during the first nine months of 2011, is estimated to be over 8% as at year-end. On the other hand, the country’s current account deficit also expanded rapidly in line with that same economic growth and reached the USD 77.1 billion level by the end of the year.

Inflation rose rapidly, particularly in the first quarter of the year, spurred due to the movements in exchange rates and commodity prices. Twelve-month CPI inflation and PPI inflation rates were up by 10.45% and 13.33% respectively at end-2011.

Measures which regulatory authorities took to maintain financial stability influenced the course of economic developments throughout most of the year.

Paralleling stronger economic activity in 2011, the Turkish banking industry registered growth on many fronts ranging from total assets to total lending and from number of branches opened to number of people employed.

Asset quality improved rapidly in 2011. Collections made on non-performing loans continued to make a positive contribution to the Banks’ overall profitability.

Deposits remained the most important item on the funding side, on the other hand the banks started to make greater use of alternatives in order to create long-term funding for themselves, to diversify the funding structure and to keep their funding costs under better control.

When considered from İşbank’s point of view, 2011 was a year characterized by particularly strong performance in terms of bigger business volumes.

As of 31.12.2011 compared to the end of the prior year;

• Deposits increased by 11.4% to TL 98,313 million
• Loans increased by 42.6% to TL 91,621 million
• Assets increased by 22.7% to TL 161,669 million
• Shareholders’ equity increased by 5.3% to TL 17,921 million

and net profit for the year amounted to TL 2,667 million.

We expect that the Turkish economy will continue to grow in 2012 even though it will likely lose some of its momentum. The developments in Turkey’s main export markets–mainly European Union countries–on the one hand and capital inflows into the country on the other will be effective on the growth rate.

Parallel to the expectations that there will be a gradual slow down in economic activity and domestic demand in 2012, it is likely that the growth in the banking industry’s loan volume will be more moderate than was the case in 2011. It can also be foreseen that the level of the current account deficit and efforts on the part of authorities to keep the deficit under control will continue to influence economic indicators as well.

Esteemed shareholders,

We hereby submit our Annual Report, Balance Sheet and Profit & Loss Statement pertaining to our 2011 activities for your review and approval. We would like to express our gratitude to the Turkish public for their steadfast trust in our Bank, to the institutions of the Turkish State for their continuous support; we thank all our employees for their dedicated efforts; and we extend our respects to you, our valued shareholders, for having honored this General Meeting with your presence.

 

TÜRKİYE İŞ BANKASI A.Ş. BOARD OF DIRECTORS