Download - ANNUAL REPORT BANK MELLAT TURKEY 2021

ANNUAL REPORT BANK MELLAT TURKEY

2021

BANK MELLAT, HEAD OFFICE: TEHRAN, IRAN, ISTANBUL, TURKEY HQ, ANKARA AND IZMIR BRANCHES 2021 ANNUAL REPORT

TABLE OF CONTENTS

I. GENERAL PRINCIPLES WITH RESPECT TO THE ANNUAL REPORT

II. CONTENTS OF THE ANNUAL REPORT

A. Introduction

1. Summary Financial Information 2. Historical Development of the Branch 3. Shareholding Structure of the Branch 4. Changes in its Capital and Shareholding Structure During the Operating Period 5. Titles of Natural or Legal Persons who hold Qualified Shares and Information about

Their Shares 6. Remarks Regarding the Shares, if any, Held by the Chairman and Members of the

Board of Managers and General Manager and Deputy General Managers of the Branch

7. Remarks on the Operating Period made by the Chairman of the Board of Managers and General Manager and Their Prospects

8. Remarks Regarding the Staff, Number of Branches, Branch Service Type, Scope of Activities and Position in the Sector B. Information about the Management and Corporate Governance Practices

1. Board of Directors 2. Senior Management 3. Information About the Operations Conducted Pursuant to the Provisions of the

Regulation on the Internal Systems of Banks and the Department Managers Regarding Internal Systems

4. Other Committees 5. Information Regarding the Practices Human Resources 6. Information about the transactions with the risk group in which the branch is

included 6.1. Information about the credits extended to the risk group in which the branch is

included 6.2. Information about deposit accounts owned by the risk group in which the branch is

included 6.3. Information about the loans borrowed from the risk group in which the branch is

included 6.4. Information about futures contracts, options contracts and suchlike other contracts

made between the Branch and the risk group in which the branch is included 6.5. Information about the Benefits provided for Senior Management 7. Outsourced Services and Information About Service Providers

C. Assessment of Financial Information and Risk Management

1. Assessment of Functioning of Internal Control, Internal Audit and Risk Management

Systems made by the Audit Committee and Its Activities within the Accounting Period 1.1. Activities of Internal Control Department 1.2. Activities of Internal Audit Department 1.3. Risk Management Activities


1.4. Compliance Activities 1.5. Overall Assessment

2. Independent Audit Report

3. Information about Financial Structure 3.1. Assessment of Financial Status, Profitability and Solvency 4. Information About Risk Management Policies Applied by Risk Types 4.1. Principles and Policies for Credit Risk Management 4.2. Principles and Policies for Operational Risk Management 4.3. Principles and Policies for Market Risk Management 4.4. Principles and Policies for Liquidity Risk Management 5. Information about Ratings and Their Contents 6. Summary Financial Information for the Five year Period including the Reporting Period

(TRY -thousand) 7. Annual Report of Bank Mellat Tehran – Iran

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INDEPENDENT AUDITOR'S REPORT

REGARDING THE ANNUAL ACTIVITY REPORT OF THE BOARD OF DIRECTORS

Bank Mellat, Headquarters: Tehran-Iran Istanbul Turkey Headquarters, Ankara and Izmir Branches to the Boardof Managers;

Opinion

We have audited the annual report of Bank Mellat, Headquarters: Tehran-Iran Istanbul Turkey Headquarters,Ankara and Iznir Branches ("Branch") for the accounting period ending on 3 I Decemb er 2021 .

In our opinion, the furancial information included in the annual report of the Board of Directors and the analysisof the Board of Directors about the Bank's situation are consistent with the full set of financial statements auditedand the information we obtained during the independent audit, in all material respects, and reflect the truth.

Basis for Opinion

Our independent audit had been carried out in accordance with the "Regulation on the Independent Audit ofBanks"published in the Official Gazette No. 29314 and the Independent Auditing Standards (IAS) which are a part of theTurkish Auditing Standards published by the Public Oversight, Accounting and Auditing Standards Authority(KGK).

Our responsibilities under these standards are explained in detail in the Independent Auditor's Responsibilities forthe Independent Audit of the Annual Report of our report. We declare that we are independent from the Bank inaccordance with the Code of Ethics for Independent Auditors (Ethical Rules) issued by the POA and the ethicalprovisions in the legislation on independent auditing. Other ethical responsibilities within the scope of the Codeof Ethics and legislation have also been fulfilled by us. We believe that the audit evidence we have obtained duringthe independent audit provides a suffrcient and appropriate basis for our opinion.

Our Auditor's Opinion on the Full Set of Financial Statements

We have expressed an unqualified opinion in our auditor's report dated April 15,2022 on the Bank's full set offinancial statements for the accounting period of January 01, 2021 - December 31,2021.

Responsibility of the Board of Directors for the Annual Report

The Bank management is responsible for the following regarding the annual report in accordance with the articles514 and 516 of the Turkish Commercial Code (TCC) numbered 6102 andthe provisions of the "Regulation on theProcedures and Principles Regarding the Preparation and Publication of the Annual Report by Banks" publishedin the Official Gazette dated I November 2006 and numbered 26333:

a) Preparing the annual activity repon within the first three months following the balance sheet day and submittingit to the general assembly.

b) Preparing the annual report in a way that accurately, completely, directly, truthfully and honestly reflects theflow of the bank's activities for that year and its financial position in In this report, the financial

indicates the development ofing these issues is also

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c) The annual report also includes the following:

- Events of special importance occurring in the bank after the end of the operating year,

- Bank's research and development activities,

- Financial benefits such as wages, premiums, bonuses, allowances, travel, accommodation and representationexpenses, in-kind and cash benefits, insurances and similar guarantees paid to the members of the board of directorsand senior executives.

The Board of Management considers T.R. Secondary legislation arrangements made by the Ministry of Commerceand related institutions during the preparation ofthe annual report

Responsibility of the Independent Auditor for the Independent Audit of the Annual Report

Our aim is to give an opinion on whether financial information included in the annual report within the ftameworkof the provisions of the TCC and the Regulation and the analysis of the Board of Directors using the informationcontained in the Bank's financial statements is consistent with the audited furancial statements of the Bank and theinformation we obtained during the independent audit reflects the truth and to issue an independent audit reportcontaining our opinion.

Our independent audit was carried out in accordance with the "Regulation on Independent Audit of Banks" andBDS published in the Official Gazelle No. 29314.

These standards require that ethical provisions are complied with and that the independent audit is planned andconducted in order to obtain reasonable assurance whether the furancial information in the annual report and theanalysis made by the Board of Directors are consistent with the financial statements and the information obtainedduring the audit, and whether they reflect the truth.

The engagement paxtner who conducted and concluded this independent audit is Adil OUgn.

Ankara, 15 April2022

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SeSmenler Vergi Dairesi 7340055266 - Mersis No: 0734005526600019 - Ticaret Sicil No: [email protected] www.rehberconsulting.com


I. GENERAL PRINCIPLES WITH RESPECT TO THE ANNUAL REPORT

1. Reporting period : 2021 2. Commercial Title of the Branch

: Bank Mellat Merkezi Tahran İran İstanbul Türkiye Merkez Şubesi

3. Address of Bank Mellat Headquarters Address

: Taleghani Avenue. No: 276 Tehran – Iran

Address of the Branch in Turkey : Büyükdere Cd. No:134 34330 1.Levent- Beşiktaş / İstanbul / Türkiye

4. Phone

: 0212 279 80 15

5. Fax

: (0212) 284 62 14

6. Website

: www.mellatbank.com

7. Electronic Mail

: [email protected]


II. CONTENTS OF THE ANNUAL REPORT

A. Introduction

1. Summary Financial Information

Balance Sheet (TRY -thousand)

ASSETS 31 December 2021 31 December 2020

CASH AND CASH EQUIVALENTS 1.331.058 1.079.033 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

316 389

FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

- -

LOANS (NET) 233.722 144.225 Loans 231.283 141.538 Non-Performing Loans 7.651 8.082 Specific Provisions (-) (5.212) (5.395) PROPERTY AND EQUIPMENT (Net) 10.443 10.819 INTANGIBLE ASSETS (Net) 236 193 DEFERRED TAX ASSET 1.504 1.014 OTHER ASSETS 3.464 1.262 TOTAL ASSETS 1.580.743 1.236.935

LIABILITIES 31 December 2021 31 December 2020

DEPOSITS 964.924 729.937

FUNDS - -

PROVISIONS 19.957 11.288

CURRENT TAX LIABILITY 16.237 1.793

OTHER LIABILITIES 6.104 4.353

SHAREHOLDER’S EQUITY 573.521 489.564

TOTAL LIABILITIES 1.580.743 1.236.935

OFF-BALANCE LIABILITIES 31 December 2021 31 December 2020

GUARANTEES AND WARRANTIES 7.424 5.181

Letters of Guarantee 6.004 4.391

Letters of Credit 1.420 790

Other Guarantees and Warranties - -

COMMITMENTS - 4


Income Statement (TRY -thousand)

INCOME & EXPENSE ITEMS 31 December 2021 31 December 2020

INTEREST INCOME 74.168 28.121

INTEREST EXPENSES (679) (389)

NET INTEREST INCOME 73.489 27.732

NET FEES AND COMMISSIONS 5.153 4.579

TRADING INCOME/(LOSS) (Net) 61.176 25.774

OTHER OPERATING INCOME 2.640 647

TOTAL OPERATING INCOME 142.458 58.732

PROVISION FOR LOAN LOSSES (-) (6.906) (2.307)

PERSONNEL EXPENSES (-) (13.146) (11.150)

OTHER OPERATING EXPENSES (-) (7.804) (5.917)

NET OPERATING INCOME/(LOSS) 114.602 39.358

PROVISION FOR TAXES ON INCOME FROM CONTINUING OPERATIONS (±)

(29.933) (8.789)

NET PERIOD PROFIT/LOSSES 84.669 30.569

2. Historical Development of the Branch

Bank Mellat Iran, established in 1980 as a state bank as a consequence of nationalization of 10 private banks, was registered with Tehran Stock Market and went public in 2008. The asset of the Bank is USD 183.797 million as of 20 March 2021 and the shareholder’s equity of the Bank amounts to USD 13.701 million as of the same date. The bank has branches in Turkey, Armenia and Korea, and subsidiary banks in UK, Germany and Malaysia. The primary purpose of the branches and subsidiaries outside of Iran is to play an intermediary role in foreign trade transactions between Iran and especially these countries and the third countries. The Branch is granted permission to operate as the branch of a foreign bank established in Turkey by the decree dated 5 February 1981 and number 82/2406 of the Council of Ministers. Bank Mellat has 3 branches in Turkey, the Main Branch in Istanbul which became operational on 16 April 1982, and the branches in Ankara and Izmir.

3. Shareholding Structure of the Branch

The Shareholding Structure of Bank Mellat Tehran Iran, which possesses the whole capital of the Branch, is as follows:

Shareholder 31 December 2021 31 December 2020

(**)Share Percentage (%) (*)Share Percentage (%) State-Edalet Share Investments(ESC) 11,19 11,20 State of Islamic Republic of Iran 11,16 11,16 Bank Mellat’s Staff Future Security Fund 6,45 6,45 First Financial Intermediation Investment Fund 5,67 5,67 Mellat Market Investment Fund(BFM) 5,58 3,91 Fanavaran Petrochemical Company 4,47 4,47 Mellat Financial Group Company 4,41 4,30 Saba Tamin Insurance Company 3,34 3,70 Other Shares Quoted on Stock Exchange 47,73 49,14 Total 100,00 100,00

(*) This is the shareholding structure as declared by the General Directorate for Financial Affairs, Directorate for Stock Market and Stocks of Bank Mellat Iran as of 31.12.2020. (**) This is the shareholding structure as declared by the General Directorate for Financial Affairs, Directorate for Stock Market and Stocks of Bank Mellat Iran as of 31.12.2021.


4. Changes in its Capital and Shareholding Structure During the Operating Period

There have been no changes in the capital and the shareholding structure of the Branch during the accounting period.

5. Titles of Natural or Legal Persons who hold Qualified Shares and Information about Their Shares 100% controlling capital holder of the Branch is the Bank Mellat residing in Tehran Iran. Natural or legal persons who hold qualified shares of the Bank Mellat Tehran, Iran as of the end of the period are indicated in the following table.

31 December 2021

Name, Surname/Title Share

Amount Share Ratios Paid Share Unpaid Shares

State-Edalet Share Investments(ESC) 22.380 %11,19 22.380 -

State of Islamic Republic of Iran 22.320 %11,16 22.320 -

6. Remarks Regarding the Shares, if any, Held by the Chairman and Members of the

Board of Directors and General Manager and Assistant General Managers of the Branch

President and members of board of directors, Director General and Assistant General Managers have no shares.

7. Remarks on the Operating Period made by the Chairman of the Board of Directors and General Manager and Their Prospects

While the markets are trying to return to their pre-epidemic situations, it is seen that the epidemic has lost its power to a large extent by looking at the coronavirus picture and vaccine map in Turkey.

The Covid 19 outbreak is largely under control in the USA and Europe.

After 2020, when the pandemic hit the service and tourism sectors, the upward momentum in activities in 2021 contributed positively to the markets.

As commodity prices and rising costs in transportation increased energy and food prices, inflation increased in the Americas and Europe.

In Turkey, the Turkish Statistical Institute announced the Consumer Price Index for 2021 as 36.08.

In the last quarter of 2021 in the Turkish economy, it started to implement its high growth, low current account deficit policy to support investment and exports.

The CBRT Money Market Board increased the policy interest rate to 19% at its meeting in March, and reduced the interest rate policy to 14% in September, October, November and December.

The CBRT directly intervened in the unhealthy price increases in exchange rates with the aim of selling them to the market.


In order to stop the fluctuation in the exchange rate, the Ministry of Treasury and Finance stated that they will provide support in case the currency protected TL time deposit product and then the CBRT foreign currency deposit accounts are converted into TL time deposit accounts upon the request of their owners.

Our Bank has started and continues to provide cash loans to Commercial and Industrial companies operating in Turkey, below the average interest rates in the market.

Negotiations on the sanctions imposed on Iran are continuing, and if the negotiations are successful, the sanctions are expected to be lifted.

Operating between two friendly countries despite the ongoing embargoes, our Bank's profit before tax in 2021 increased by 191% compared to the same period of the previous year and reached 115 million TL. The total of Turkish Lira cash loans increased by 95% compared to 2020, and our Capital Adequacy Ratio was 77%.

By increasing our profits in 2022 by taking into account the market and geopolitical developments, our bank provided economic support to the two friendly countries as always, and our efforts in this direction will increasingly continue.

8. Remarks Regarding the Staff, Number of Branches, Branch Service Type, Scope of Activities and Position in the Sector

As of December 31st, 2021, the number of the Branch’s staff consists of 43 people (December 31st, 2020: 45 People). The Bank has three branches in Turkey, including the Main branch. The branch performs various banking operations. Its core business includes playing an intermediary role in trade transactions with Turkey and the Islamic Republic of Iran, and financing such operations when required. The Branch, carrying out all banking services through its branches within the scope of the permission given; particularly mediates effectively in commercial activities between Turkey and Iran. Within the scope of the import-export transactions between the two countries, it meets the demands for cash and non-cash loans. The branch has an important place in the mediation between two countries in terms of its position in the sector under the current conditions.

B. Information about the Management and Corporate Governance Practices

1. Board of Directors

The vision, mission, short and long term strategic objectives of our Branch which operates as the branch in Turkey of a bank founded abroad are determined by the Board of Directors, established in accordance with the Article 23 of the Banking Law no. 5411, and with such powers and responsibilities of an executive board. As of the end of the period, the Board of Director, which consists of 5 members, gathers in periods it deems necessary, and regularly reviews the policies and strategies specified, with reference to the continuously changing circumstances. Our Branch’s Board of Directors also acts as the credit committee. The Board of Directors provisionally delegates some of its powers to the senior management based on the decisions made from time to time.


During the meeting, all written proposals and demands about the agenda are submitted for the approval of Board of Directors together with all necessary documents; the proposals and demands approved by the Board are communicated to the authorities to be implemented pursuant to the meeting. The proposal approved by the Board is turned into resolution till the last day of the month the meeting is held, at latest, and presented for the signature of Board's President and Members. The curriculum vitae and professional experiences of the members of the Board of Directors are as follows:

Title Name Position Educational Status Chairman of the Board of Directors(*): Bahman Eskandari Chairman Bachelor’s Degree Members of the Board of Directors:

Aziz Akhondi Asl Member Bachelor’s Degree

Mohamad Hossein Abbasi General Manager Post Graduate

Ahmad Jamehdor Member Bachelor’s Degree

Abdulkadir Alper Ekşinar Member Responsible for Internal Systems Bachelor’s Degree

BAHMAN ESKANDARI– Chairman of the Board of Directors

Bahman ESKANDARI graduated from Industrial Management Department of Islamic Azad University in Iran, with a Bachelor's Degree. In his banking career, he worked as Specialist, Branch Manager, Regional Manager, Department General Manager and Member of the Board of Directors. He has been working as a Member of the Board of Directors at the Head Office in Tehran since 2019, and started working as the Chairman of the Board of Directors at the Branch on 25.10.2019.

AZIZ AKHONDI ASL - Member

Aziz AKHONDİ ASL graduated from The City of Rest Trade College in Iran and was awarded the Bachelor’s Degree in Trade. He worked as a Vice General Manager, Regional General Manager, and Member of the Board of Directors during his professional career in banking. He has been working as Vice General Manager who is responsible for Foreign Transactions at the Head Office in Tehran since May 2016, and has been working as the Chairman of the Board of Directors at the Branch in accordance with the Board Resolution adopted on 06.08.2018.

MOHAMMADHOSSEIN ABBASI – Member

Mohammad Hossein ABBASİ graduated from Azad University in Iran and was awarded the Bachelor’s Degree in Accounting. He worked as a Specialist, Vice Manager and Vice Manager for Foreign Transactions and Assistant General Manager for Financial Affairs during his career in banking. And he started working at the branch with the capacity of General Manager on 01 December 2016.

AHMAD JAMEHDOR - Member

Ahmad JAMEHDOR is a graduated of Ankara Academy of Economical and Commercial Sciences, Department of Banking and Insurance. He started his professional banking career at the Branch in 1985 and worked in several departments such as current accounts, remittances, accounting, human resources, and financial affairs. He has appointed as the Assistant General Manager in May 2009. He is the Assistant General Manager in charge of Financial Control, Treasury, Human Resources, Information Systems, Current Accounts, Administrative Affairs and Operations. In September 2013 he was appointed Deputy General Manager.


ABDULKADİR ALPER EKŞİNAR - Member Responsible for Internal Systems Managing the Audit Committee

Abdulkadir Alper EKŞİNAR, has Post Graduate Degree, CRMA, (Certification In Risk Management Assurance) and Capital Markets Board; Level 3, Derivative and Corporate Governance Rating Licenses and also 31 years of Finance / Banking experience. He graduated from Istanbul University, Faculty of Political Sciences and Department of Public Administration and started his career in Finance / Banking in 1988. Abdulkadir Alper EKŞİNAR, who worked in various positions at various banks and financial institutions, joined the branch in September 2014 as the Internal Audit Department manager. When he was appointed as a Board member in 2019, and since then, he has been appointed as a Member of the Board of Directors Responsible for Internal Systems.

2. Senior Management

General Manager is responsible for the management and operation of the Branch and the units thereof as per the basis and risk management principles identified by the Board of Directors. Details on senior management are stated below.

Title Name Position Educational Status

General Manager Mohamad Hossein Abbasi

Post Graduate

Assistant General Manager /

Deputy General Manager:

Ahmad Jamehdor

Assistant General Manager in charge of Financial Control, Treasury, Human Resources, Information Systems, Administrative Affairs

Bachelor’s Degree

Assistant General Manager Abbas Bayat(*)

Assistant General Manager Responsible for Loans and Foreign Trade Transactions

Post Graduate

Assistant General Manager Mostafa Sharafi(**)

Assistant General Manager Responsible for Loans and Foreign Trade Transactions

Bachelor’s Degree

(*)Abbas Bayat started his duties as of 05 May 2021.

(**)Mostafa Sharafi resigned his duties as of 21June 2021.

Details on the background of the senior management are as follows: MOHAMMADHOSSEIN ABBASI – General Manager Mentioned in the section; Board of Directors. AHMAD JAMEHDOR – Deputy General Manager - Assistant General Manager Mentioned in the section; Board of Directors.


MOSTAFA SHARAFI – Assistant General Manager Mostafa SHARAFI graduated from Azad University in Iran with BA degree in English Language Translation. During his banking career, he has worked as the 2nd Person in Charge of Administrative Affairs, as an Accounting and Budget Specialist, and as Foreign Currency Exchange Specialist. . He started to work in our branch on 09 February 2017 as Assistant General Manager. Mostafa Sharafi resigned his duties as of 21 June 2021. ABBAS – Assistant General Manager ABBAS BAYAT graduated from Islamıc Azad University in Iran with Post Graduate degree in Business Management - Insurance Management Department. During his banking career, he has worked as Deputy Director of Foreign Exchange Transactions and Foreign Currency Remittance - Deputy Manager of the Letter of Credit Department - Manager of the Letter of Credit Department. He started to work in our branch on May 05, 2021 as Assistant General Manager.

3. Information About the Operations Conducted Pursuant to the Provisions of the Regulation on the Internal Systems of Banks and the Department Managers Regarding Internal Systems

Internal Audit, Internal Control and Risk Management systems, which comprise the internal systems of the Bank, are subject to the Board of Directors under the supervision and audit of the non- executive member who is in charge of internal systems. The member who is in charge of internal systems is obliged to report any issue that may negatively affect the operation of the Branch to Board of Directors, through the reports he regularly receives from independent audit firm and internal control, internal audit and risk management departments. Internal Audit, Internal Control and Risk Management Departments operate within the scope of Regulations approved by Board of Directors. Organization Chart of Internal Systems is as follows.

BOARD MEMBER RESPONSIBLE FOR INTERNAL SYSTEMS

Abdulkadir Alper EKŞİNAR

RISK MANAGEMENT

Yener BOZKURT

INTERNAL CONTROL

Mustafa KAYA

INTERNAL AUDIT

Leyla AKÇA

YAZGIÇ Adnan NACİR


Vocational information of line managers working within internal systems of the Branch are indicated below. Leyla Akça Yazgıç, Internal Audit Department: She has a Bachelor's Degree and has been working for the Branch for 27 years. He was appointed as the Internal Audit Department manager in December 2019.

Yener Bozkurt, Risk Management Department: He has a Bachelor’s Degree and 25 years of banking experience. He was appointed as a unit manager in February 2020. Mustafa Kaya, Internal Control Department: He has a Bachelor’s Degree and 33 years of banking experience. He was appointed as a unit manager in January 2020.

4. Active Committees of the Branch

The committees have been established pursuant to the regulations as specified under the Banking Law no. 5411 and relevant legislation and organized in accordance with those regulations and every measure required to allow them to work independently have been taken by the Branch. Names, tasks, powers and members of miscellaneous committees within our Branch are explained below: Assets/Liabilities Committee

Assets & Liabilities committee, consisting of the assistant general managers under the chairmanship of the General Manager is responsible for evaluating the market conditions and determining the policies regarding maturity consistency between assets and liabilities, maintaining the interest rate difference, foreign exchange position and liquidity pursuant to those conditions. During the year, the Committee had 54 meetings and resolutions.

Executive Committee for Information Technologies The Executive Committee for Information Technologies consists of the Member of the Board of Directors who is responsible for Internal Systems, Deputy General Manager of the Main Branch, System and Network Manager, Application Development and Software Manager and Internal Control and Risk Management Executives under the chairmanship of the General Manager. The Committee holds meetings annually.

The Committee was established to fulfill the following missions:

To ensure that Information Technologies are consistent with the Bank’s scale and operations and the quality of offered products and the strategic objectives of the Bank,

Approval of the policies regarding the management, sustainability, maintaining the information security and confidentiality in Information Technologies,

To assess the risks that may be imposed due to the use of Information Technologies and approve the action plans designed for minimizing the risk levels resulting from Information Technologies,

Approval of the resource needs prioritized in line with the strategies for Information Technologies,


To evaluate the findings regarding general controls in information technologies and

application controls identified in consequence of internal audits and independent audits and approve the actions to be taken,

Evaluation of risk analysis results regarding outsourced support services for Information Technologies and submitted report regarding qualification of outsourcing companies,

Assessment of detected breaches of information security and making decisions regarding actions to be taken and establishing an “emergency response team” when required,

Assessment of the results of the tests performed for the purpose of ensuring business continuity and data security,

Evaluation of the current developments in information technologies and data security and their applicability at the Bank,

Assessment of the complaints that may occur regarding Information Technologies and the services provided based on the same and approval of the actions to be taken,

Evaluation and approval of investments and projects regarding Information Technologies.

Risk Committee

Scope of activities of the Committee;

Preparation of the risk management strategies and policies to be followed, and their submission to the Board of Directors for approval,

Negotiating and resolving the issues brought to the agenda by Risk Management, Determination of the limits regarding exposed risks, monitoring the limit violations,

making proposals to the Board of Directors for eliminating such risks, Making proposals to the Board of Directors on changes in risk policies, Monitoring and reporting for the risk detection, identification, measurement and

management process to be performed by the Risk Management Unit, Monitoring to ensure the accuracy and reliability of risk measurement methods

and results.

The committee consists of a member of the Board of Directors Responsible for Internal Systems, the Assistant General Manager and the Risk Management Unit Manager, chaired by the General Manager. During the year, the Committee had 12 meetings and resolutions.

Audit Committee

Abdulkadir Alper EKŞİNAR has been appointed as a member of the Board of Managers Responsible for Internal Systems on 01.10.2019 to carry out the duties of the committee, and still continues this duty.

Member of the Board of Directors Responsible for the Internal Systems, managing the functioning of the Audit Committee, is in charge of the matters referred to in paragraph 2 of Article 7 of the Internal Systems Regulation published in Official Gazette 29057 on July 11, 2015. Purchasing Committee It is responsible for the purchase and sale of movables and software in line with the requirements of the Bank. 22 purchases were made during the year.


5. Information Regarding the Practices of Human Resources:

Probation period for any contracted personnel to be employed at the Branch is two months whereas this period is four months for the personnel to be employed as a union member. Those employees who are thought to be useful for the Branch during the probation period will become a member of the permanent staff upon the relevant line manager’s suggestion. Branch managers and division heads will submit their requests regarding whether the employment contract of the candidate staff subject to trial period is to be maintained to the Personnel Department, before the end of such period of the candidate.

Advancement means promoting an employee of the Branch to a higher position than his/her current position. In case of advancement, remuneration of the staff also changes starting from the clerical level. Fulfilment of the following conditions is required for advancement of an employee;

Completing a specified term of office at the current position; Be granted positive qualification; Bear the necessary capabilities and qualifications that a higher title requires; There should be a vacant position in the upper title. The staff should pass the exam to be applied when necessary.

In order to be promoted to the position just above them, Branch personnel must serve in their current position:

for minimum 3 years if they are university graduates for minimum 4 years if they are high-school graduates

However, this period may be extended for one year maximum, within the framework of the authorizations. A performance bonus payment is made at least once a year in consideration of the performance note and other criteria (warnings and punishments). A performance bonus payment of 478 thousand Turkish liras was made in March 2021.

6. Information about the transactions with the risk group in which the branch is

included

6.1. Information about the credits extended to the risk group in which the branch is included

Credit Risk of the Risk Group in which the Branch is included (1) (2)

31 December 2021 31 December 2020

Cash Non-Cash Cash Non-Cash

Credits and Other Receivables

Opening Balance 41.911 - 52.861 -

Period-End Balance 161.203 - 41.911 -

Received Interest and Commission Revenues - - - - (1) Risk group is defined in paragraph 2 of Article 49 of the Banking Law number 5411. (2) The information in the table also covers the receivables from the banks as well as the loans extended.


6.2. Information about deposit accounts owned by the risk group in which the branch is included

(1) R

isk gro

1. R (1) Risk group is defined in paragraph 2 of Article 49 of the Banking Law number 5411. (2) (As of 31 December 2021, 698.649 TL of the 709,020 TL deposits belong to Bank Mellat Iran Merkez, 10,371 TL

belongs to the Central Bank of Iran.) (3) (As of 31 December 2020, 587,299 TL of the 584.222 TL deposits belongs to Bank Mellat Iran Merkez, 5.923 TL

belongs to the Central Bank of Iran.)

6.3. Information about the loans borrowed from the risk group in which the branch is included

Loans borrowed from the Risk Group in which the Branch is included(1)

31 Aralık 20201 31 Aralık 2020

Beginning of Period - - Period End - - Interest Expense on Loan - -

(1) Risk group is defined in paragraph 2 of Article 49 of the Banking Law number 5411.

6.4. Information about futures contracts, options contracts and suchlike other contracts made between the Branch and the risk group in which the branch is included

As of dates December 31st 2021 and December 31st 2020, the bank has no futures and option contracts with the risk group of the Branch, and other similar contracts.

6.5. Information about the benefits to top management:

As of 31 December 2021, payments of TRY 4.225 thousand (31 December 2020: TRY 3.563 thousand) have been made to the senior management of the Branch.

7. Outsourced Services and Information About Service Providers

Support service organizations and services outsourced or to be outsourced when necessary, under the scope of the Regulation on Support Services for Banks and the Authorization of the Institutions to Provide Such Services are as follows:

Name/Title Service Purchased

FİNEKSUS NETWORK ÇÖZÜMLERİ A.Ş. Swift Paygate Messenger Software Maintenance

On 17 October 2018, after the US announced sanctions, SWIFT, headquartered in Belgium, announced that some Iranian banks on the sanctions list would be suspended for access to the system. Access of the branch to SWIFT has been cancelled.

Risk Group of the Branch Grubu (1)

Subsidiaries, Affiliates & Partnerships jointly

controlled Direct & Indirect

Partners of the Branch

Other Real & Legal Entities included in the

Risk Category

Deposit

31 December

2021

31 December

2020

31 December

2021

31 December

2020

31 December

2021

31 December

2020 Beginning of Period - - - - 584.222 298.223End of Period (2)(3) - - - - 709.020 584.222Deposit Interest Expenses - - - - - -


C. Assessment of Financial Information and Risk Management

1. Assessment of Functioning of Internal Control, Internal Audit and Risk Management Systems made by the Audit Committee and Its Activities within the Accounting Period 1.1. Activities of Internal Control Department

The Internal Control Unit is structured to prevent the risks in the financial and operational activities of the Bank and hold them under control at a reasonable level. Internal control activities are continuously monitored at every stage of the business; the practices, policies and processes that determine these activities are renewed in line with the needs, and the integrity of these activities is ensured by the internal control system. The workflows related to the activities of the Branch have the necessary control tiers and points appropriately. Conducting the operations for the activities of the activities in an efficient, correct, regular and secure manner, functional task divisions, transactions, approval authorities and limits, information systems controls, post-processing controls and other process-specific controls are provided by the staff at each level. Said activity and internal control structure also plays an important role in the reliable and effective execution of accounting and financial reporting systems processes and controls. The main components of the internal control activities structured within the internal control system are controls for the execution of activities, information and communication, financial reporting systems and compliance controls. The internal control unit, operating in accordance with the member of the board responsible for internal systems, intends to make the utmost contribution to ensure that the internal control system is in compliance with the legislations and standards in terms of structure and functioning, and is healthy, effective and strong. The activities of the internal control unit responsible for examining, monitoring, evaluating and reporting the results of the controls on the activities of the branch are structured to include the head office units and branches. The findings, opinions and recommendations related to the internal control activities are first shared with the employees and related process owners, contributing to the implementation of measures and solutions that improve the processes and activities of the internal control system. All these activities are continuously monitored by the internal control officers as well as those who are carrying out the activities and the evaluations related to the activities are reported to the senior management. The results of internal control activities are also regularly monitored and assessed by the Board of Directors and the board member acting as the audit committee. The internal control unit is subject to quarterly review for the head office units and at least twice per year for the other branches. Internal control activities are carried out on the basis of testing the control steps and points on work flows in terms of banking processes, and according to the prepared risk matrix.

1.2. Activities of Internal Audit Department

The Bank Mellat internal audit unit continues to work under the supervision of the member of the board responsible for internal systems. The Internal Audit Unit performs the task of auditing in line with the internal policies, policies, principles and targets of the branches and all other departments including the internal control, risk management,


legislation and MASAK compliance, as well as the laws and other relevant legislation and activities carried out by all branches. This unit, which performs banking processes and information systems audits, also carries out preliminary research, investigation and investigation activities if necessary. The reports prepared as a result of the work of the unit, having an auditor and an assistant auditor, are transmitted to the Board of Managers and related units through the audit committee in accordance with its importance and priority, and the measures taken for the identified issues are monitored by the internal audit unit. The Board of Directors closely monitors the activities of the unit, thanks to the periodic activity reports submitted by the board member who serves as the audit committee. In 2021, the supervision of the banking processes carried out by three branches, and the head office units in the framework of BSEB and COBIT, was carried out in accordance with the determined risk-oriented annual plan.

1.3. Risk Management Activities

The risk management process and the functions involved in this process are among the primary responsibilities of the Board of Directors. Risk Management Unit which is a functional part of the risk management, function together with the Assets-Liabilities Committee, reports to the Board of Directors and the senior management with daily and monthly reports on exposed risks. Board of Directors closely monitors the work of these committees and the risk management unit and continually evaluates the conformity of the results to the objectives set out. Stress test and scenario analysis carried out during the period taking into account the existing conditions are submitted to the information and evaluation of the Board of Directors.

1.4. Compliance Activities

Compliance is one of the main tasks and responsibilities of managers and employees at every stage in the branch. Such activities can be grouped as compliance with legislations (Internal Auditing Unit), compliance regarding banking activities (Internal Control Unit) and compliance for laundering the Proceeds of Crime (Compliance Manager). Within this scope, automatic rating of various banking transactions in terms of risk has been improved, by considering customer risks, transaction risks and amount risks. The results of compliance activities are regularly monitored and evaluated by the senior management of the Branch.

1.5. Overall Assessment

On 17 October 2018, it was announced by Foreign Assets Control Office (“OFAC”), operating under US Treasury Department, that some Iran-based financial and industrial institutions, including Bank Mellat, the main shareholder of the branch, were included in the list of secondary sanctions. In addition, after the US announced sanctions, SWIFT, headquartered in Belgium, announced that some Iranian banks on the sanctions list would be suspended for access to the system. Access of the branch to SWIFT has been cancelled.


Following the transfer of the branch to the secondary sanctions list; Central Bank of the Republic of Turkey (CBRT) removed the Branch from the EFT system, and the Branch accounts at the CBRT were closed, except for obligatory provisions. Similarly, the closure of the placements of the branch in the domestic public banks and in some domestic private banks was requested by the related banks and the funds in question were withdrawn to a large extent. The branch is not able to enter into Treasury tenders and cannot use the cash it owns, as placements in other banks. Consequently, there is a significant decrease in the interest and commission income of the Branch. The Branch does not foresee any shortage of capital adequacy and liquidity ratios in the following periods but if necessary, it is considered that resources/capital can be provided from Iran Headquarters to the branches in Turkey, and that there would be no problems in meeting the current obligations of the Branch. In the next period, alternative opportunities will be researched; alternative possibilities will continue to be investigated. Activities have been initiated to opt for different financial banking products, which would bring different types of operational income. The first limit allocations were made for the purpose of growth in loans. In addition, the budget activities of the Branch for the year 2022 are in the process of approval by the Headquarters, and have not been finalized as of the date of this report.

2. Independent Audit Report

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BANK MELLAT, HEAD OFFICE: TAIIRAN-IRANisraxnur, TURI(Ey MAIN,ANKARA AND ızııin sRANctIBs

INDEPENDENT AUDITOR,S REPORTFOR THE ACCOUNTING PERIOD OF1 JANUARY-3I DECEMBER 2020,UNCONSOLIDATED FINANCIAL STATEMENTSAND FOOTNOTES ON THESE

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We have audited the accompanying unconsolidated financiaI statements ofBank Mellat, Head Office:Tahran-lran lstanbul Turkey Main, Ankara and Izmir Branches (the "Branch") as of December 3l§ı,2020, which are comprise of unconsolidated statement of financial position, unconsolidated statementof income, uconsolidated statement of income and expense items under shareholders' equiğ,unconsolidated statement of changes in equity, unconsolidated Statement of cash flows and with asummary of significant accounting policies and footnotes on unconsolidated financial statement.

In our opinion, the unconsolidated financial statements present fairly, in all material respects, theunconsolidated financial position of the Branch as at 3l December 2020, and its unconsolidatedfinancial performance and its unconsolidated cash flows for the year then ended in accordance with theBanking Regulation and Supervision Agency C'BRSA) Accounting and Financial ReportingLegislation which includes "Regulation on Accounting Applications for Banks and Safeguarding ofDocuments" published in the official Gazette no.26333 dated l November 2006, and other regulationson accounting records of Banks published by Banking Regulation and Supervision Agency andcirculars and interpretations published by BRSA and Turkish Accounting Standards ("TAS") for thosematters not regulated by the aforementioned regulations.

QmeaRehbcr Ba9msz Den.tim ve'l emin|i Mali Vüşavirlii A.Ş.

INDEPENDENT AIJDITOR,S REPORT

To the Board of Managers of Bank Mellat, Head Office: Tafuan_lran İstanbul Turkey Main, Ankara andızmir Branches

Independent Auditing of UnconsoIidated Financial Statements

opinion

Base ofthe opinion

Our audit was conducted in accordance with the "Regulation on Independent Audit of Banks"published by the BRSA on the Official Gazette No.29314 dated 2 April 2015 and the Standards onIndependent Auditing (the "SIA") that are part of Turkish Standards on Auditing issued by the Publicoversight Accounting and Auditing Standards Authority (the "PoA"), our responsibilities under thesestandards are further described in the "Auditor's Responsibilities for the Audit of the UnconsolidatedFinancial Statements" section of our report. We hereby declare that we are independent of the Branchin accordance with the Ethical Rules for Independent Auditors (the "Ethical Rules") and the ethicalrequirements regarding independent audit in regulations issued by POA that are relevant to our auditof the unconsolidated financial statements. We have also fulfiIled our other ethical responsibilities inaccordance with the Ethical Rules and regulations. We believe that the audit evidence we haveobtained during the independent audit provides a sufficien riate basis for our opinion.

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K€y Audit Matters Horv Key Andit Matter Addressed in the Audit

Going Concern basis

The unconsolidated financiaI statements have beenprepared assuming that the Branch will continue asa going concem on the basis that it will be able torealize its assets and discharge its liabilities in thenormal course of business.

As explained in the footnote regarding the briefinformation on the branch's services and areas ofoperation, some Iran-based financial and industrialinstitutions, including Bank Mellat, were includedin the list of secondary sanctions on l7 October20l8. Requests for termination ofbusiness relationswith the Branch were submitted by domestic banksworking with the Branch. As of the date of üisr€port, the effects of the mentioned issue on theoperations and financial statements of the Branchhave explained in the relevant footnote,management takes precautions for this situation.

Appropriaten€ss of going concem basis used by theBranch management for the preparation ofunconsolidated financial statements and as a resultthe assessment of the Branch's ability to continueas a going concem basis is a key audit matter forour audit.

In relation to going concem assumptions, weinquired with the Branch management tounderstand their plans ofthe entity's abilityto continue as a going concern and weobtained written representation fiom Branchmanagement regarding their plans for futureaction and the feasibility ofthese plans forthe next year. We evaluated managem€nt'splans for fufure actions in relation to its goingconcem assessment, whether management'splans are feasible in the circumstances.

We evaluated Branch management's budgetfor one year after the balance sheet date andreliability of the assumptions underlyingthese forecast.

We performed audit procedures as ofthe dateofthis report regarding subsequent events toidentifo those that either mitigate orotherwise affect the entity's abili§ tocontinue as a going concern.

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Kavak]ıdere Vergi Danesi 7340055266 - Mersis No: 07]40055266000l9 - Ticaret Sicil No: 48726rehber(g)rehberconsultin8.com www.rehberdanismanlik.com

Key Audit Mattcrs

Key audit matters are üose matters that, in our professional judgment, were of most significance inour audit of the unconsolidated financial statements of the cunent period. Key audit matters wereaddressed in the context of our independent audit of the unconsolidated financial stat€ments as awhole, and in forming our opinion thereon, and we do not provide a separate opinion on these matte§.

We evaluated the appropriateness and theadequacy of disclosures in relation to theevents and conditions that may cast doubt onıhe Branch's ability to conıinue as a goingconcem and their plans assessing theseevents and conditions.

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Responsibilities of Management and Those Charged with Governance for the UnconsolidatedFinancial statements

The Branch management is responsible for the preparation and fair presentation of the unconsolidatedfinancial statements in accordance with the BRSA Accounting and Financial Reporting Legislation,and for such internal control as management determines is necessary to enable the preparation ofunconsolidated financial statements that are fiee from material misstatement, whether due to fraud oreITor.

ln preparing the unconsolidated financial statements, managem€nt is responsible for assessing theBranch's ability to continue as a going concern, disclosing, as applicable, matters related to goingconcem and using the going concem basis ofaccounting unless management either intends to liquidatethe Branch or to cease operations, or has no realistic altemative but to do so.

Those charged with govemance are responsible for overseeing the Branch's financial reportingprocess.

Responsibilities of the Independent Auditor Relative to Auditing of Unconsolidated Financialstatements

[n an independent audit, as an independent auditor, our responsibilities are these:

Our purpose is to obtain reasonable guarantee as to whether the non-consolidated financial statementsas a whole, contain material misstatements or not, based on elTors or frauds. The reasonable assuregiven in consequance of an independent auditing conducted in accordance with Banking Regulationand Supervision Agency Audit Regulation and lndependent Audit Standarts, is a high assurance levelbut, there is no guarantee against assessing always ofan existingmaterial misstatement. Misstatementsmight be based on error or fraud. These misstaternents are deemed material if the misstatement withinreason, expected to affect the economic decisions that the users ofthe financial statements will receivewith reference to the table, alone or collectively.

By force of an independent audit conducted in accordance with Banking Regulation and SupervisıonAgency Audit Regulation and Independent Audit Standarts, we are in process of using ourProfessional judgement and suspiciousness.

In Addition

The risks of "material misstatements" originating from errors or fiaud in unconsolidated financialstatements are identified and evaluated; audit procedures that respond to these risks are designed andimplemented, and sufficient and appropriate audit evidence is obtained to provide a basis for the audit.Fraud could be includes collusion, forgery, wilful neglect, mispresentation or breach of intemalcontrol, because of that a material misstatements arising from frauds has higher level of risk thanm isstalements arising from errors.

The internal control relevant to the audit is evaluated to design audit procedures that are appropriate to

the situation, but not for presenting an opinion about the effectiveness ofthe controI.

It has been evaluated whether the accounting estimates made and coused by the management and relevant disclosures, are reasonable, or n

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Kavaklıdere Vergi Dairesi 7340055266 - Mersis No: 07]40055266000l9 - Ticaret Sicil No: ,18726

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Based on the audit evidence obtained, there have been decided about whether the management hasreason to believe that there is a material uncertainty about the circumstances or events may causeserious doubt about the Bank's ability of continuing to it's going concem, or not, and about thecompatibiliğ ofusing the going concern concept by the management. When we confirm that there is asignificant uncertainty, in our report, \-ve must point to th€ relevant disclosures that are inunconsolidated financial statements. if these disclosures are insufficient, we must issue anotheropinion rather than a positive opinion. The results obtained by us, are based on evidences obtaineduntil the date of audit report. However, any future event or circumstance may terminate the continuityofthe Bank.

There have been evaluated, including comments, whether unconsolidated financial statements,disclosures are included, and tlıe underlying transactions and events of these tables are reflect thetruths accordingly, with their general presentation, structure and content.

On top ofthe other issues, we are on report the material audit findings with the planned coverage andtiming of tie independent audit to those charged with govemance, including any significant intemalconhol deficiencies we have identified during the audit.

We have made a notice that we have complied with the ethical provisions relating to independence tothose charged with governance. ln addition, we have delivered all the relations and otherconsiderations that could be considered to have an impact on independence, and if any, relevantmeasures, to those responsible for the senior management.

Among the items that are reported to those charged with govemance, we specifu the most importantissues, namely the key audit issues, in the independent audit of the financial statements that are notpresent in the current period. Where the legislation does not allow announce the issue to the public orin quite exceptional circumstances where it is reasonably expected that the negative consequences ofannouncing the issue to the public will be likely to be exceed the public welfare that would arise fromthat announcement, we can decide not to report this issue in our independent audit report.

Other Liabilities Arising From the Legislation

No important issue was detected that the set of accounts ofthe Bank in l January - 31 December 2020accounting period is out of keeping with the provisions of Turkish Commercial Code and with the

Articles of lncorporation of the Bank, as per the fourth paragraph of 402nd Article of 6102 numberedTurkish commercial code.

The Executive Board has made the explanations and submitted the documents required in scope oftheauditing, as per the fourth paragraph of4O2nd Article of Turkish Comrnercial Code

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Kavaklıdere Vergi Dairesi 7340055266 - Mersis No: 07340055266000l9 - Ticarel Sicil No: 48726rehb€r(g]rehberconsultin8.com wİ,w.rehberdanismanli}.com

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Headquaıter's AdüessTurkey Main Branch AddressTelephoneFaxWebsiteE-maii address

Bahman Eskandarichairman ofthe Board ofManagers

MERKEZi TAHRAN iSTANBULTüRKiYE MERKEz şuBEsiBüyukdele caddesi Binbilçiç€k sokak No, 1

34330, 1.Levent " |STAN8UL - TUBK|YETelefon : (0850) 288 63 63

(0212) 27s 80 15Faka | (0212j 284 6214 - 284 66 57Tic. sic. No.: 181790 - islanbuısüvift : BKMTTR|SE-mail :[email protected] ;wwumellatbank.comMelsis No. i 0140003254400014

THE UNCONSOLIDATED FINAI{CIAL REPORT OFBAltK MELLAT, HEAD OFFICE: TAHRAN-IRAN ISTANBUL TURI(EY MAIN,

Aı{KARA AND IZMIR BRANCHES As oF 31 DECEMBER 2020

mellat@mellaıbank.com

The year end unconso|idated financial repon designed by the Banking Regulation and Supervision Agency in line withCommuniqud on Financia| Statements to be Publicly Announced and the Related Policies and Disclosures consists ofthe sections listed below:

: Taleghani Avenue. No: 276 Türan lran: Büyiikdere Cd. No : l 3 4 3 4330 l.Levent-Istanbul/Turkey: 0850 288 63 63: (0212)284 62 |4: www,mellaibank.com

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GENERAL INFORMATION ABOUT THE BRANCH AND HEAD OF BRANCHLINCONSOLIDATED FINANCIAL STATEMENTS OF THE BRANCHCONSOLIDATED FINANCIAL STATEMENTS OF HEAD OF BRANCHEXPLANATIONS ON THE CORRESPONDrNC ACCOUNTINC POLIClES APPLlED lN THE RELATED PERIODINFORMATION ON FINANCIAL STRUCTL.RE AND RISK MANAGEMENT OF THE BRANCHEXPLANATORY DISCLOSURES AND FOOTNOTES ON UNCONSOLIDATED FINANCİAL STATEMENTSOTHER EXPLANATIONSİNDEPENDENT AUDITOR,S REPORT

The unconsolidated financial statements and the explanatory footnotes and disclosures, unless otherwise indicated, areprepared in thous8nds of Türkish Lira, in accordance with the Communique on Banks' Accounting Practice andMaintaining Documents, Tuıkish Accounting Standards, Turkish Financial Reporting Standards, related communiquğsand üe Banis' records, have been independently audited and presented as attached.

Member ofthe Board ofManagers

MohammadHossein AbbasiGeneral Manager and Member ofthe Board of Managers

ad JamehdorDeputy General Manager arıdMember ofthe Board ofManagers

Information related to responsible personnel for üe questions can be raised about financial statements:

Name-Suİname / Title : Nedim Karakuş / Senior Assistant specialistPhone No : 0850 288 63 63Fax No | (02121284 6214

www. mellatbank.com

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Abdulkadir Alper EkşinarMember ofthe Boaıd of Managerand Intemal systems Executive

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SECTION ONE

Hisıory of üe BraDch, including ill establishment date, inilal lega] slatus and anendmenls to l€gal slafus, if anyExpıanaıion abouı üe Broch'§ shreholdin8 strucİıfe, shdehoıd€rs who indjvidMlly orjoinıly have power lo ontrol üe mmagemenı andaüdil direcıly or indirecıly, changes rcgğdlng üe* subjecls during üe yeü, if ey. and informaıion about lhe.ontrolling gİouP ofı}e BrmchEx9l4ation abouı üe B6ch's cbiimm fud bmbe.§ ofıne boğd ofD3age6, memb€6 ofüe audil @mnih@, Pıeside.t md executive vic€prcsidenls, ry chrges, ad üe iDfomatiotr about üe Bach shes ıh.y ho]dlnfomallon on shdeholde6 haüng qualified shresBri.f information on üe Bfuch's snices and areas ofoPe.ationDifferenes beıwen ıhğ commu queon PrepMtioo ofcon$lidaled Financisl slalements ofBank§ and Tlfki§h Ac..@ting staıdğds ad shon €ıPlDıtiotr.boul üe cntilics subjecl lo full consoliülatioD or propotional consolidaıion and enıilies which are deducıed ftom equity o. entities which aİe noı iıclud.j in üesr

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aalarıc€ she.t ojnırıcial Posiııon Slalemenl)slatenent of off baloığe she€t commitDetrlsslaternent ofprofit or tossslaı.m€nt ofprofiı or loss ed other compreh€nsiv€ incomestaığnent ofchan8€§ in equilystalement of cash flowsslaı.m€nt of pmfiı app.opriatiof,con§olidat€d financial statem€nl§ of üeBranch's Headquan€.s

§lcİloNlsBE&Exp]anation§ on Ac.luniing Policies

Explanatioos oo ü€ bari5 ofp.esentatioEİplanalions on §faıe8y of usiıg fiıa[cial insıtDeois aDd explan5lions on foİei8ıl cur.ncy ğ"ansactioDsExplıD.ıioc on invesınenB h a§so.|at€s aİd sübsidüaridEıpıa[.ıioo! oı foİward ğansaction§ optioN aİd dcrivat v€ instumğlısEİpımation5 orı iıt rcn incom€ md €İp€ns.Explanatioos o. f€. aıd c.omi§sioo incone ed exp.rıs€sEİplaİ.tioos oD filaacial a&§eBExplamtioü oo inpoiİncnt 06 financial ass€t§Explandions on off§.tting fiİaacial i!§t uDeıt§ExplaEtioG on §al.s and r.Fı.cha§€ agİetnentl a[d scçuriti.s l€İding ğ saction§Explaıations oo ass.ts hcld for resale aıd rElıted to disc.ntinu€d op€ntioıs and explaİation§ oı liabililies ,elaıed with üe§€ a§r€ısExplandioos oo goodüll and oü.r intangible asset!Explaıaıioos on tangible fixed a§şğ5Explınations on lğacing ğansachonsExplanaılons on Proüsions ajıd mnırngml commlırn€nbEİpıana.ions on obligitioDs r€lated to the enployee ridısExplanaıions on l.axaıionExplanalions on bonowing§Explanations on i§suanc€ ofshaie ce.tifi.ate§ExDlanatiot§ on acceptances and availed drJfuExplanaıion§ on goveffin.nı grantsExpl ı|,ons oD profiı resBes ald profiı appropnaılonExplrıaıions on €arnin$ per §hreEtplanıions on rc|ıt.d partiesExp|ıD.lioDs on ğ§h 8Dd c6sh equiva]entExpı.ıations on §.gmcnı r.portingRcclassificıioD3

SECTION FOUR

Infoİmation Relıted To FinaDcial slİİlcture and Ri§k Mrİageİıent of The Bnnch

Eıplanaıions oo üar.holilğs' equityEıplaD5ıions on cr.dil nsıEıplrn rions oiı currğıcy nsİEİplaİaıioDs oo i.lcrd Eıe risİExplanaı|oDs oD posütion n* of eqııity s€üıntes ın ban*in8 booİExplanatioi§ oD liqüdity riskE (Planalio3 on l.v.rıg€ rdlioEilanaıiool on fair vılu€s of fioaDcia] a§§ets ,.d l|ıbübesExblrnllioİls on üe actuties cnri.n o oE b€haraİd accounl ofoüğ Pcrson3Eiplanaıions on ri§k Eaİag€rt€nt

SECTION F|VE

Expleatory Disclosures and Footnol€§ on Uncoıı§olidaüed Financial statenenülExplanıtioo5 a[d oot€s r.laied lo asseısExplaıation§ and not€§ r€lat€d ıo liabilitiesExp|anıtions and not€s ı€lat€d ıo offbalaİce sheet accountsExplanaıions aıd notes r€lated to incom€ statem€nt

Eİplanaıions and üıoıes rclated to changes in shareholde§' equityEİplanalio.s and'noıes ıeıat d ıo staıem€nt of ça§h flowsExplanalion§ and not€s.elated ıo üe Branch's fisk group

Explarıtioos rclat d ıo üh. domestic, for€isı, ofr-§hore kanch€s and forci8n r€pıes€ntativ.s ofüe Büan.h

Explaıaıions and noı.s r€lated to §ub§equent ev€nts

stCIıoN SIx

other er(pıanaıiolıs .nd dis.losur.soıh€r eİplanation§ o[ ılıe Br.İch's operaıion§

§ğcuoNlEylNExplaıation§ on lndepcndcnı Audhoİ'§ R.port

Eıplanaıio$ on ind€penĞnı auüıo.'s reponExplaİıtioff a.d not s piePaİ€d by indep€.de.t auditd

l02l02

BA}IK MELLAT, HEAD oFFICE: TAHRAN-IRAN israxnur, TURKEY MAIN,ANKARA AND izııin ınaxcrrps

NOTES AND DISCLOSURES TO THE FINAI{CIAL STATEMENTSFoR THE YEAR ENDED 31 DECEMBER 2020Unless otherwise stated amounts aİe expressed in thousands of Turkish Lira ("TL).

ll.

SECTION ONEGENERAL lNFoRl}tATIoN

HlsToRY oF THE BRANCH, INCLUDING ITs ESTABLISHMENT DATE, lNlTlALLEGAL STATUS AND AMENDMENTS TO LEGAL STATUS, IF ANY:Bank Mellat, Head Oflice: Tahran-lran Istanbul Turkey Main, Ankara and lznir Branches ("theBranch"), which is based in Tahran, Iran, established its branches in lsıanbul, Ankara and lznıir on18 August l98l, 23 February 1984 and 16 January 1992, respectively. The branches aıe registeredunder the scope of Foreign capital Encouragement Law No. 6224, which permia üe transfer ofdistributable profits to üe HeadquarteI. The branches started operations after getting üe approvalfrom the Treasury Undersecretaıiat in April l982, May l985 and October t992, respectively.

EXPLANATION ABOUT THE DRANCH,S SHAREHOLDING STRUCTURE,SHAREHOLDERS WHO INDIVIDUALLY OR JOINTLY IIAVE POWER TO CONTROLTHE MANAGEMENT AND AUDIT DIRECTLY OR INDIRECTLY, CHANGESREGARDING THESE sUBJEcTs DURING THE YEAR, lF ANY, AND lNFoRMATloNABOUT THE CONTROLLING GROUP OF THE BRANCH:

The shareholding strucfure of the main shareholder of the Branch - Bank Mellat Tahran, Iran, is asfollows:

shıreholders3l December 2020

shıre Percentagc (70)(')3l Dc..mber 20ı9

shır. P.rc.nt.c. (7o) (")

stata-Edalet shaıe lnvestmen§(EsC) l 1,20 ]0.00stat. of Islanic Republic of|İanBank Mcllat'§ sıaffl.utılre Security Fund

l 1,16 l7,006.45 6.45

First Financia] Intc,medaation Inveslrnent FundFanavaİan Pcıİochcmical Company

5,674.47

MelIat I]inancia] GrouD ComDanv 4.30 3,l4saba Tamin |nsurance Company 3.9lMellat Market lnvcsEnent Fund(BFM) 3.70 6,23

social secuİity In§tiıution of lraİl ],E lother shares Quoted on stock Exchange 49.14 ]3,37l'oıgl !00.00 l00.00

(') shaİeholding stİucfuİe as of 3 t December 2020, rnnounced by ıhe Ba.k Mellat Gcneral Diİ€clorare of Financial Affairs,stock Exchang€ and shareholder§ of Iran,(.') shareholding st ucfure as of3l December 2019, announced by the Bank M€l|at General DirEctofaıe ofFiıOcial Affair§,stock Exchanga and shaİeholdeıs of Irarı.

EXPLANATION ABOUT THE BRANCH,S CHAIRMAN AND MEMBERS OF THE BOARI)OF MANAGERS, MEMBERS OF THE AUDIT COMMITTEE, PRESIDENT ANDEXECUTİVE VICE PRESIDENTS, ANY CHANGES, AND THE INFORMATION ABOUTTHE BRANCH SHARES THEY HOLD

l!t.

'|'illc Responsibilit\ Educıtion

ChairmanUndergİaduaıechıirmın of th. Boırd of

Manı!ars: Bahman Eskandği

Und€18raduateM.mb.r. ofth. Boırd ofManıgars: Aziz Akhondi A§l Member

General Manager PostgraduatcMohammadhossein AbbasiUndergraduateAhmad Jamehdor MemberUndergraduate

Abdulkadir Alper EkşinaİMember Respon5ible FofIntemal systems

Undergraduate

Deputy Gen€rel Mınıger /vi.t Gen€rıl }ı3nıgers Ahmad Jarrıehdor

Financial Contİolling. Treasury,Accounting, Human Resouf ce§,Information systems,Administralive and op€ralionsAssistant Responsible GeneraIMaİıagerAssi§taİıt General ManagerResponsible for Current

-Jffi_

UndeİgraduateMostafa sharafi

İ

?ı z t (\

aofşt*.o.

iThe individuals mentioned above do not possess

I.

l

BANK MELLAT, HEAD OFFICE: TAHRAN_IRAN İSTANBUL TURKEY MAIN,ANKARA AND İzııİR nRıNcrrns

NOTES AND DISCLOSURES TO THE FINANCIAL STATEMENTSFoR THE YEAR ENDED 31 DECEMBER 2020Unless otherwise stated amounts are expressed in thousands of Turkish Lira ("TL"

lv

GENERAL INFORMATION (Countinued)

INFORMATION ON SHAREHOLDERS HAVING QUALIFIED SHARES

Explanations of shareholders and entities that have share in the capital of Bank Mellat Tahİan IIan,which has all ofthe capital ofthe company;

3l December 2020

Nıme/Comın€rciıl Titlc shıre ımountsshıre

Dercantaga Pıid-in cıpitılUnpıidDortion

state_Edalet shafe Investİnents(ESC) 22.000 %l|,20 22.000state of Isl aıİıic Republ ic o f lrarı 22 000 yoll,|6 22.000

3l Dc.ember 20l9

Nam€/commercial Titl€ shır€ amount§shırc

Dercantıge Pıid-in ceDitslUnpaidportion

Iustice share recipients (provincjal investors) 60.000 %30,00 60.000Islamic RepubIic of lran 34.000 %11,00 34,000

BRIEF INFORMATION ON THE BRANCH,S SERVICES AND AREAS OF OPERATION

Following the inclusion ofthe Branch in the secondary sanctions list, the Braİıch was rçmoved from the BranchEFT system by the CBRT and the Branch accounts at the CBRT were closed except for the required reserves.Likewise, the closure of the placements of the Bİançh, which is located in domestic public banks and somedomestic private banks, was requested by th9 r9levajıt banks and üc funds in question were largely withdrawn.The branch cannot enter tİeasury auctions and cannot evaluate th€ cash it holds as placements in other banks,Therefore, there is a significant dccrease in the interest and commission inçome of the Braııch, Braıches insubsequent periods if needed alüough not foresee a problem relating to capital adequacy and liquidity ratiosBranch sources in lran Headquarters Turkey / capital is thought to be provided, No difficulty is envisaged to meetthe current obligation§ of the Branch,

ln the upcoming period, developments will be followed arıd altcmative opportunities will continue to be explored,and effons have been i.itiated to focus on other financial banking products that will have different operatingincome. Liquid allocations were made for growth purposes in loans,

The balance sheet amount of the Branch as of 3l December 2020 is Tl, 1.236.935, the bala.nce sheet amount of30 s€ptember 2020 is TL 1.194.085, the balance sheet amounı of30 June 2020 is TL 1.021.878, the balance §heet

amount of 3l March 2020 is TL 1.002.235 and as of3l Deçember 2019 was realized a5 TL 1.023.390.

Capital adequacy ratio of the Branch was talculated as 84,290/" as of December 3l, 2020, 86,85% a5 ofSeptembeı 30, 2020, 89,08% as of June 2020, 89,78% as of March 2020, 90,86% a§ of December 3l, 20l9.

As of 3l December 2020, the Branch has 45 employees (3l December 20l9: 49 employees).

Uİüless otherwise specified, the information in the financial statements and the rclated explanations and footlıoteshas been prepared in Thousand Turkish Lira.

2

a

t

Ir.',

a!ı

The Branch operates in banking services and its core business activity is financing the commercial activitiesbetween The Republic ofTurkey arıd Islamic Republic of[ran-

on 17 october 2018, it was announced by Foreign Assets control office ("oFAc"), operating under USTreasury Department, that some lran-based finançial and industrial instifutions, including Bank Mellat, the mainshareholde. of the Branch, were included in the list of secondaİy sanctions. In addition, after the US announcedsanctions, swIFT, headquaİtered in Belgium, aİınounced that some lranian banks on the sanctions list would besuspended for açcess to the system. Access ofthe Branch to swlFT has been cancolled.

BAI\K MELLAT, HEAD oFFICE: TAHRAN-IRAN İstaxnuı TURI(EY MAIN,ANKARA AND İZMİR BRANCHES

NOTES AND DISCLOSURES TO THE FINANCIAL STATEMENTSFoRTHE YEAR ENDED 31 DECEMBER 2020Unless otherwise stated amounts are expressed in thousands ofTurkish Lira C,TL").

Vl

vtt

DIFFERENCES BETWEEN THE COMMUNIQUE ON PREPARATİON OF FINANC|ALSTATEMENTS OF BANKS AND TURKISH ACCOUNTING STANDARDS AND SHORTEXPLANATİON ABOUT THE ENTITIES SUBJECT TO FULL CONSOLIDATION ORPROPORTIONAL CONSOLIDATION AND ENTITIES WHICH ARE DEDUCTED FROMEQUITY OR ENTITIES WHICH ARE NOT INCLUDED IN THESE THREE METHODS

The Branch does not have investments in subsidiaries and associates subject to consolidation.

CURRENT OR LIKELY, ACTUAL OR LEGAL BARRIERS TO IMMEDIATE TRANSFEROF EQUITY OR REPAYMENT OF DEBTS BETWEEN BRANCH AND tTS SUBSIDIARIES

None

a

\ri

t

ı

3

GENERAL INFoRMATloN (Countinued)

BANK MELLAT, HEAD OFFICE: TAHRAN-IRAN İSTANBUL TURKEY MAIN,ANKARA AND iZMiR BRANCHES

UNCONSOLIDATED STATEMENT OF OFF-BALANCE SHEET COMMITMENTSAS oF 31 DECEMBER 2019Unless otherwise stated amounts aİe expressed in thousands ofTuİkish Lira ("TL").

sEcTloN TwoUNCONSOLIDATED FINANCİAL STATEMENTS

I. BALANCE SHEET (STATEMENT OF FINANCIAL POSİTİON)

The accompanying explanations and notes form an

4

(scctiotFive) Jl December 2020 jl De.dbe. ı0I9

^ssf,TsTL fC TL Fc

l. FlNANcIAL AssETs (N.o 5:l5.72J 53J.699 1.o79.|2z 563,1El 311.232 9J7.:tJ61.1 Cısh ınd C.sh Equivılents 5{5.3J{ 53:l 699 1,0?9.0JJ 562.770 371.252 937.o271,1.1 Cash Assc|s and centİal Baık (I-a) l86.?78 446-329 6]3.107 I95 ]E3 2E4 936 4E0 3l9l 1.2 aaks (l-c) ]J8 5J6 87.370 445-926 ]67 ]E7 89 3l6 456 70]1,1 3 Reeivables from Mon€y Maİİeis

1.2 Fiı.n.i.l Aa!.B ıt r.iİ y.|u. Throügh Pİoliı or Lo§s (ı-b) JE9 Jll9 lt{ {l{1,2 l Govcmm.nt D€bı secüıiesl12 :]89 ]li9 4l{ 4l41,2.] Olher FiDocial Asseıs

l.]Fını.ciıl At!.t! .ı Fıir V.lu. Tbmügh oü.İ Conprch.Biv.

(l-d)

l3l GovemDenl Debı secDriıiesl].21,3 3 oıhel Fi. cial Assetsl.{ Derivıf v€ FiDınci.l Assets

l4I Derivalive Finocial Asscts al Fair value Thlough Profil orLoSs

142D.rivıtivt Financiıl A§s.rs ıt Fıiı vaju. Throügh oü.rcoİıDrlt.odw ]ncod. ı-k)

9].52ı ı.a|.2r5 5.0]9 6E.357 73.396ll.FINANCİAL ASSETS MEASURED AT AMORTISED COSTNd) 50,70J

2,1 {l-e) 4E.0l6 93j22 I4l 53E 905 68.357 69_262

2.2 {l-i)

',jı'.c.onDc Receivıbl.§

2.1 t,o.ns M.ı§urtd ıt ADonis.d cosl {|-f)74_1 Govcmmenl Debt s€curilies

olher Finocial Asseıs1 4.28.082 6.0E2 8.]l6 E.Jl62.5 Non-P.rforminE Lo.n5

(5.395) 1,1.ıE2) (4.182)2.6 sD.ci6. Pİovisions G) (5.J95)

lll. NON_CURRENT ASSETS OR DISPOSAL CROUPS "Hf,LDFoR sAL['Ai-D"rlELD FRo!l DlscoNTlNLED oPEıL4TIo§s" (Net) (1-o)

l|.ld for sale Pu.Do§es]l31- Related to Di$ontinued op€raııonsı\, f, Q[:IT}, I\\,EsT}tEITs1,1 lnvesh.n6 iı Associ.i.! (N.l) (l-ı)4.1 l Associales valued Bas€d on Equity M.lhod

unconsolidaled Assocaates4 ı,2(I-h)1.2 Inv.slm.nt i. subsidiıries (Net)

4 2.1 unconsolidated Financia] sub§id;ancs

4-22 Unconsolidated No.-Financial Subsidiancs.1.] Joinıly Coniroll.d Pırt .6hiD3 (Joi.t vĞnturc) (Net) (ü_i)

4 3,1 Joint ventı]res valued Ba§€d on Equity Meüod4 ],2 uncon9olidaıed Joiıl venfu res

l0.El9 l1.0ll l1.0ll(|-ı) l0.El9PROPERT}' AID EQLIP}IE\T {Ş.ol9J l9l l9l(|-m) l9J1,1. ı\TA|iclBLE Assf, Ts (ı-.i)

6l coodwilll93 l9l l9ll9362 oıher

(|-d)Yll. IriyEsT]u[İT PRoPERTl' (\.0Ytll. CI:RRENT T{xAssET

9l61.0ll 9l6Dı]l-f,RREDT,1.x AssET (1-o) 1.0l{l\.l-|0l55 1.262 321 ll6(l-r) 1.I07x. oTtlf,R AssETs

SŞs6.cıs 5li0-665 11z.725 ı,Oı.].]9lJ609.559 ffiTOTAL ASSETS

statement5

BANK MELLAT, HEAD OFFICE: TAHRAN-IRAN İSTANBUL TURKEY MAIN,ANKARA AND izılİR sRAIİctlBs

UNCONSOLIDATED STATEMENT OF OFF_BALANCE SHEET COMMITMENTSAs oF 3l DECEMBER 2019Unless otherwise stated amounts aİe expressed in thousands ofTurkish Lira ("TL").

I. BALANCE SHEET (STATEMENT oF FINANCıAL PostTloN)

vl l.1-1

The accompanying expIaııations and notes form an

(s.ctioDFiv.) ]I Dec.hb.r 20l9

I-1ABILITlEs TL ı,c TL Fc Toııl

ı. Dt]PoSlTS (lI-.) l97,25E 5J2.679 729.937 l97.7El J51.7l6 549.{97

lı.n,\DS aoRRolvED

(ll-.)llt. }toı..E}' nıARKETSll,, st]CtiRITlEs Iss|-ED (Neı)4l Bıll§42 A§s€i Back€d Secu.itjes4,3 Bonds

},tlsDsJl52

\1-Fl§ANclAL LIABILITIES AT FAlR vALtjf, THROUGHPROFIT OR LOSSDf, RlYATl\,f, fI\A\ClAL LIABI1-1Tlf, s (tl-b)Derivatjv. Fi.ıncial Liabilities al Fatl vılu. Th@ud Profit or Los§

1.2D.İiy.tiv. Fin !ıcial Liabilitiğ ıt Fıiİ vılu. Throud üh.rcolnDfd.oriüt Incon. (l1_0

vI İl, ıjAc-IoRlı..G LIABl LITf, s

lx, (ll_e)LE^sE LlABILrtlEs9.14]x. PRovtstoİ-s (tl-s) E.E2E 2.460 l1.2EE 7,2E9 2.1545.4]ll0 l Geneİa] Loan Loss Proü§ion 4 4El 2-144 6.625 3.J30 ].90l

l0 2 Provision for Re§tİucting4.3I9 4 ]l9 ] 73l ].7]ll0.3 Reseıes for EmDlovee Betrefils

l0 ]ı lnsuae Tshdcal R.s.n.s (Neı)l0 5 2E 3l6 344 28 153 28l

\ı. (lı-ıı) ı.79] l.?9.] J.lEJ J.l&]ctlRRE|iT TAx LIAB|LITY

xlt. Df, FERRf, D T.A)i LIABILITY {ll-h)

(lı_i)\l Il.

LIABILITIES RELATED TO N*ON{URRENT ASSETS"HELD FoR sAlf," AND"HELD FRoM DıscoUNTlNUED oPERATtoNs"(N.0

l3.1 }tcld for sale pürDose

l ].2 R€laı.d lo Dscontinued oD€rat;oıs

xlv st]BoRDINATED DEBT (ll_i)l4 I

l42 other D.h Instİumcnı§

l.E95 1.J5J 2.10l 32E 2.129oTIIf,R LlABILITIES (|l-d) 2,.l5E

156.EJE{ll-t) IE9.56!t .|E9.s6{ l56.EJ6sIIAREHoLDERs, İQt lTt20o 00oı6 l 200.00o 200,000 200 000

l6216.2 l shafe premjüm

|6.22 shafe canc.llaıion profi ı5l6.2,3 olhğ CaDiıal Resew€§

54 {l0]) (l0])16 ]AccMuIarcd orher comprehen§ive lncom€ or Lo§s NoıR€clırsified Througt Pİofit or Loss 54

l6,4Accurnulat€d othe. comprehensiv. Incoıre or Los§ Reclas§ifiedThrouglt Profiı or Lo§s

9l6 E55 E559l6l6,165 l|652

E55 E559l6 9l6l6 5,3 Extnordinary Res€Nes1654

288 594 258 086 258 011616 6223 31925E,025 258 02J 223 319l6 6,1 Priol Yec' Income or (Losd

34-10130 569 ]0 569 ]:l 707l662 Cunert Y€d Incone o. (Loss)161

5]7.03,L ,cJ6.9J5 669,192 ]5{-l98 1.02J.J90TotAl, LlABtLlTIEs 699,90l

5

ents.

BANK MELLAT, HEAD OFFICE: TAHRAN-IRAN İSTANBUL TURKEY MAIN,ANKARA AND İZMiR BRANCHES

IJNCONSOLIDATED STATEMENT OF OFF-BALANCE SIIEET COMMITMENTSAS oF 31 DECEMBER 2019Unless otherwise stated amounts are explessed in tbousands ofTuıkish Lira C,TL)

Il. OFF-BALANCE SHEET COMMlTMENTS

Th€ accompanying gxplanation§ and noıes form an integral

]l l 3ı D.c.nb.r 20l9(s..tionFit.) t,L fc To1.I Tl- },(, Toı.ı

ıl+ t.t9ll.ll 510 ] 33l l2

l!2ll! oü.İ ıd.6 oaG.eMı4 ] 33] 1:5|2l2l117l]l]ll]2l4l,lrll52l6

l3

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, cİ.dil cfd. üd B..kinİ s.fui6 Pr@ononl2l ll2l |22|ll orı.. ln.vMbl. commjtI..nı37222|272 ,f Ft\AIctAL lIsTRt,tlE\Ts (lll b)]l vı.iv. Fimcin İ.shm..B]ll]l2]l] !

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,2r3,2r4]2]5]2J6

,z4|]]4: f (.iQn cun.nd Fufu r6_s.ll]2,]25l\ 212,]76

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auffiğ FDnd ınd prif.li.aılror,l] lnvfuaı saındd H.ld i6 cun6d!

cheı, R-.iY.n ad colldion 26dd Rdiv.d ftr col]dion

olhg lı.m! under cusıonv43

J2ı,2ttcflvfD,l

l]l ]7052t]

].4, ]22 l6]2 2211r!5,t3] 43]

,.jülr1 2İL6rı 6.JlJ 1.7s1.73Jıtr*D ARA:iTEts

,.032,9lı

+36

frL^*;M;,i-i;;;

BANK MELLAT, MERKEZİ: TAHRAN-İRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE izııin şunrı,rni

3ı ARALIK 2020 TARiHi irisıRIyI-A, «oNsoı-ing oLMAyANKAR VEYA ZARAR TABLOSU(TutaıIaı aksi bclirtilmedikçe Bin Türk Li.ası ("TL") olaİak ifadc cdilmiştiİ.)

lI t. STATEMENT OF PROFIT OR LOSS

The accompanying explanations and notes form an integral

l?l

1

l

li\coME A\D EİPEi\sE lTEMsJl Dec.mber 2020 3l Dc..nbeİ ı0l9

l. lITfREsT rİ(-oME 7r.lrlll (lvr_l) 6 925l2 lnt E!ı Reivd a,m Rcrc0€R.{uncmğE 5 426l] lni.Es R*iv.i frm Bı.ı3

lnlcİ.d Re.iv.d lion Mona M.rkd Tİangctionsİnı...n [email protected] llon Mirk.lble smİiti€s Podrolio (İv_._1)

ı5ı Fj.üciı] AJdt .ı Fnr vı]u. 1hİoın Pİo6i ğ (L6dl52 Fj.r.iıl

^g§ ı fİ. vru. T6.@ü onğ cmo.en..tiv. I..m.

!5] Fi.D.iı] A.t lr.l Mğ!r.d ı Anqti!.d co.i

l7 111

n. ııl,f,REsT ı]İPE|\§tr (a39) (llı)1l (]) (]l21. ln'...j e ıu.d. B6o*cd1l ı.tğ6' Ex@*6Mma Mükd Tiü.djons

l.b.n O s@nıiğ lD.d2a lAinı lnğ6ı ErE.g

ıll. İ-aT tİTf, REST ıi"coMa 0 + !l)İET lEas

^İD coMMlssloİ§ ltcoMİ

.11 Fğ üd cmB,ği6! Rğiv.n 4 53] l0.ı7]4ıl l l234|717 F6 üd cmmigi6. Pnd (r)42lA12

DlvlDaND l§coMl,TR^DtıiG INcoME41-oss) aN.o 7s.171Trıdinı c.inı / aLMJ) o. sond.!Trıdi.ı Gıi.r(L.s' on D.ri!.liv. Fi.mciıl InrırlnoğFoİ.i9n Erchuı. Gıin! / (L@3) 75174o,r DR oPı:lıAlltc lNcoııt]ToTAL oPl]R^TlNG tNcoME (rIr+lv+v+vt+vtI+vlIl)

l\. (2.307| 11.177,PRovlsıo|\ foR Lo^ı LossEs (_}

PıjRsoNNEL ExPf,NsEs C) (l l,l50) {l0.Jtı)oTHEn oıER TıİG DİİENsDs {_l (5.9l7)

xlt, |iET oPf R^TlNc l§covE]l1,ossl {tx-x.xn

\lll.ExcE§| AMoUm RDconDED As lNcoME ITERMEnGıı

l]lcoMf{ı.ross) FRoM r]İı'DsTMEİTs ıİ.' sLBstDtARıEsco:§sollDATID a^sfD o\ Eot,ITl, }tfTHoD

l\coup(lrss) o\ NrT vo§ET^nY Po§mo§L\coMEJ'ExrEN§E aEloRE TAxf,s ERoM co§TrııUınicoıER Tıoıs (xn+...+xl,)PRovı§lo\ FoRTAIES o\ li-cotlD FRot{ co§Tı\tjL\GoPf,RATlo|\sl1, (l0.9Jr)

(3926) (ll017)1l2]) lıOı)112 [email protected] Tu l..m. €lfd ( -)

lr1 [email protected] Tü EİH. EJlcr l.) 260 |30

NıT lıom/Lo§sEs İRoM coml ulİc oarı llo:ts

tl](. tIcoME ıRoIl DlscoİTlİt|ED oPDlıATloIs!9l lnm. frm Non{uİmı A§a! H.ld for Rgle

P,ofil fr@ sn6 of Affii..4. subndiJi6 rd lüi.t v6fu ğs

19] l.cm. o. .in.r [email protected] oDmlim§ıoss FRoM DıscoNTl NUID oPERATloNs (_)

20ı Los flm ısdJ h.ld aor d.

202ıa 6 d. oı rEi.ı.., ıündiliğ ..d joindy @lro[Gn dddB

20] tjs ar66 oüğ diğ.ıinu.d oErılio.sPRoI,|T /lo§sEs aEİoRf, TAxEs FRoM DtscoNTllt][DoPER^TtoIs (xvol_xtx)İRovlsloı\ İoR tNcoME TA\ES FRo}l DIscoNTln-UED

71l122 M.ı!n Tu ln@m. Efrd (+)

2:] M....d Tü P@ino (_)

illll.NEİ fıoPİİ/ı]ossDs aRoM DlscoNTİ]ft EDolEMTloNs (xx4xİt):§DT PRoFlT/Los§Es {:!(vll+xxn) ov_il

].r l

:.ı 2 Plonl / 16 ofMj.diğ shı.<_) -7 -a! aarindlıa] E 3hı,. a ıf-

ents.

BANK MELLAT, HEAD OFFICE: TAHRAN_IRAN İSTANBUL TURKEY MAIN,ANKARA AND İzrvriR nnaxcrns

[,NCONSOLIDATED STATEMENT OF INCOMEFoR THE YEAR ENDED 3l DECEMBER 2019Unless otherwise stated aİnounts are expressed in thousands ofTuıkish Lira ("TL").

Auditedcurrent p.riod

3I Deccmber 2020

Audiı.dprcvious pcriod

3l D.cemh.İ 20l9

I 30.569 31.7o1II.

ct]RRt]Nl, Pl]RIoD INCo}tEll,osso,1]If, R (,oMPREIIENSIvE INcoME l56 2.008

2.1 Noı Reclı§sificd Through Prolit or Loss ı56 20J2.|,l ProDerty and Equipment Revaluaıion Increase/Decrease2.1.2 Intangible Assels Revaluation Increase/Decrease7.1,3 Dcfincd Bcnefit Pcnsion Plan Remeasurement Gain/Loss l56 20]2.1.4 oüeİ comDrehensive Income lıems Not Reclassificd Through Prolit or Lo§s2,1.5 Tax Relaıed ülıer comDrchen§ive Income ltems Not Reclassified Through Profi( or Loss2.2 Reclıs§ified Through Profit or Lo§s 1.80522l Foıeign cunency Translation Differences2.2 2 valııation and/or Rec|&s§ification Incamğ/Expen§e ofüe Financia] Asseıs at Fair value

üroügh othcrcomp.ehensive lrcolıl€ l 805Cash Flow ll€dPe Income/LossForeign Neı Investm€nt Hedge Income/I-oss

2.2.5 other comDreh€nsive Income lterİıs Reclas§ified Throuü Profi! or Losse§2.2.6 T6x ReIated other comprehe.rsivg Income ltems Reclassifi€d Through Profit or Loss

I lI. ToTAı. Co}ıPRl]ılEı..sIvE I\Co}t[ (I+ıD 30.725 16.1|5

lV STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

2.2.32.2.4

The accompanying explanations and notes form an integral pan

8

ta

l

.,

statemenls

(

BANK MELLAT, MERKEZi: TAHRAN-İRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMiR ŞUBELERİ

3ı ARALIK 2020 TARiHi irinınıyı.q. KoNsoLiDE oLMAvAN özxı,yxı,x nrĞişiıı TABLosU(TutaıIaı aksi bclirtilmedikçe Bin Türk Lirası ("l't-") olarak ifade edilmiştir.)

(

STATEMENT OF CHANGES İN SHAREHOLDERS, EQUİTY

ctl^NcDs lN sllARl]llol,Dı]Rs ı:QlrlTy^.cJm!ıtled

oth.. com p..h.nJiı.lncomc or Erpen!. Noi Recl.§ified

ıhıouEh Profil o. tn!!

Accumul.r.d oth.. compr.h..Jiv.Incon. or Eİpenre R.clı3jfied

ıhrough Profiı or t,og!l 7 l J

l. Prior Period End B.l.ncc 200.1ıİı (l0.}) 855 273.r19 31.707 .l58.8J8

tl.ciretioG A@İdiıt to Tutİiü Accoddn8sbrdıİd No 8

2.ı2.2 chmİ6 in Accoulinı Polici.§lll. Adju,ı.d B.ıınninq Bılın.. (l+ll) 2m.0oo (l0]) 27J.r79 34.707

Toİl conpr.h.n.iv. l icon. J0.5!9 J0,?25cıpn lnc...!. b} (:.Jılc.Dilıl ln...ıs by l,i.rnrl sotrc..

vl l. Pıid_in c.Diacl innııion.diuJtm.nı dıffc....evlll. conv.nibl. Bond! ıo shı.dl\. §ubo.dinıı.d Debı lıtırum..§

lncr.ıt /Deİe.J. bY oth.r chr.ı6 l lxl, 6l f,.ı.6.|6 lJ{.70ıll lll2 (]4 7o7)

ll ]

P..iod E.d B.lııc. (tl l+rv+......+x+xl) ı0o-000 ı53.oı5 JO.s69

I

23

45

6

Incr.$.]Dccİt$. of Accumülaicd R.valuıtiorı R.s.rvc on Td!8ibl.,Ac.uınülat d G.io§4-os.*s d R.m.ası!ğn.nl of D.fin.d B€n fil Plııs.

R..ıaarifi.d al Pİofil or t-oss,Eichıngc Diff.rcno.! on Trrı3lriion Res.rvğ,Ac.uİıüht€d R.vılultiofı anüo. cıa§sific.tjoo Gains / (I-oss§) of Fin nciil A§§ğs il Fıi. valuc d,fou8h odt6 cornp..hcn§iv. |n.rrn.,

Thaı will Be Rc.|ır§ificd aı Pİofiı or Loir)

The accompanying explanations and notes form an integral pan of

9

arrİO

I

aı

(

BANK MELLAT, MERKEZi: TAHRAN-İRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMİR ŞUBELERİ

31 ARALIK 2020 TARiHi irinanryı-.ı KoNsoLiDE oLMAvAN özxayı.ı,x nnĞişiıı TABLosU(Tutaılaı aksi bclirtilmedikçc Bin Türk Lirası ("-tl,") olarak ifade edilmiştir.)

(

V. STATEMENT OF CHANGES lN SHAREHOLDERS, EQUITY

özKAYNAK KALı:Mt,liRiNDEKlDEĞi§lKl,iKLER c.r,itıl

A..umulıı.d oü.. comP..|td.iv.ın.on. or Erp.nJ. Noı Rel.dli.d

ıhrouıh Profil o. kg^..!n!l.t

d orn.. comp..t.n.iv.Ircom. or EıPa.. Re|.gin.d

ahrourh Prolit or ırsl ı J 4 a

l. Prior P.riod End B.lı.cĞ (.}06) 11.805) 662 l]0.95l 471,.l73

ll.cofi!ğio Accçdinr t0 TEtilh Acco@ti!€str ljd No.t

2ı22 chulc, iı

^c.outiıc Polici.s

lll. AdiuJl.d Bcpin6in{ 8.1ınce {l+lll 200.ooll (J06) (ı.805) 66, 97.611 l!0.95l 1r7,.l7ıı\,. To1.1 com n..hen!iv. l n.ome 20J l-a05 J,1.707 ]6,?l5

c.Dnıl lnc...* bı ı.ı..nılso!rc.t\ |l. P.id-iı cıpit.l inn.tion rdiu3rn..l diff.r.n..vlll, conv.rıibk aond! ıo shrrd

subordiIıred D.bı lnJlrufr .ntI.....t /D6.ğ& by olh..ct.nİğ

l30.753 (lJ0.95l)ll lll2 l9] l30 ?J8 (l30 95|)ıı ]

P..iod ı:.d B.ı.... (ı|l+lv+,.....+xaxl) (tOJ) ı2J.r19 31.1o7 .t58.8J8Il. hcrcs€1Dccrcıs€ ofAc.ümülited R.vıluııioı R€s.rv. on Tangibl.,2. Accumulıtcd GıinJ.oir.s oll R.m.a§uğncnl ofDcfincd Bmcfit Plrns,

tİofiı o( to§,1, Exchange Diffğ.nc.s otı Translation Rc§.Nc,5. Ac.umulıtcd R.vdu!ıion {d/of clğsification Gains / (I-oi§.' ofFininci.l Assı! ıi Fliİ valu. üroud othcİ comp.Ehcnsivc Incom.,

a€ Rccl&rsificd ıt Ro6ı o. Lo35)

The accomparıying explanations and notes form an integral part of §,ı"ıu1t

l0

92.6ıl

c.oit.| lrcİ..( bv c..h

BANK MELLAT, MERI(EZ|: TAHRAN-iRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE iZMiR ŞUBELERi

31 ARALIK 2020 TARiHİ İrisaRIyLA, KoNsoLiDE OLMAYANŞUBE,NiN MERKEZiNiN KoNsoLiDE FİNANSAL TABLOLARI(Tutallar aksi bclinilmedikçe Bin Türk Lirası ("TL") olaİak ifade edi lmiştir.)

1.2

Vl. STATEMENT OF CASH FLOW

The accompanying explanations and notes form an

CASH ı.Lows FRo}l BA\Klı.,c oPf, tl,lTlo\s

1.1 oD.r.ting Pmlil Before Chıııes in oD.r.tins A§et3.nd Li.biliiiB l1,95J 16.769

1.1,1 l7 604 63.9)7|.|.2 (]E9) (E]2)1.1,3

1.1.4 Fc€s and commi§sions Received 4 56] l0 4731.1.5 75 111.1.6 col]ections From Preüouly wnttaoff Loans and oli€f Rec€ivabl.s 2]4 1371.1 7 c.§h Paynenı! to Pcrsorın€l aıd s€rvic, suDDliğE (l ! l50) (l0.3l l)l 1.8 (l125E) ( ı7.244)

olher 12 254 ,]5

chın!ğ ın oD.İıtiDı Asse§ ınd Lirbiliti.s subiel to Bi.kinq oD..ıtion§ (l l2.052) (66.7J7)

1.2.1 N€l 0ıcr.as.yDecreıs. i. FinAncial As§eıs at Fair Va]ue Tfuouqh Profil or Loss 25 7E

1.2.2 Nei (Incr.as.lD€crea§€ itr Due Flon Banİ§1.2 3 Neı (Inc.ea§.!D.cr.as€ in Loans (69 867) {65 866)l2,4 N.r (I!c..2§.}D.cr.a§€ ü oüer a5s€l5 (746) 2 169l2-5 N€ı Incr.a!.(Decrw) in Ba* D€Dosits 266-103 (72 045)1.2-6 N€ı lİcr€ase{D€crcde) i! other DeDosits (86.263) 71690|27 Nel Increase/üD€crea§e) i ı Fin$ncial Laabilities ıt Fair Value Throuİh Profil oı Lossl2.8 Nel Increa*(Decrese) in Fuds Bo(owedl29 N€l hcrea$(Dccreas.) in Maıured PaYablesl,2.10 N€l lrıcr.a§€(D€cre$.) in oıher Liabilİics 2 2oo (3 763)

l. ]\.ı.ısh Drovid.d froD bınki.g op...tio.s l2{,005 ( l9.96t)

B. CASH FLOWS FRO}i IIVESTINC ACTIYITIES

Il. N.ı cııh Pİovided F.ofi Invelting Activitis l90 229.JE6

2-| cdh pad for üe purcha§e of Associales. sub§idıaries and Joinl veı|urcs2-2 crsh obıain.d ftom üe sale of Ass8iaıes, subsidia.i€s aıd Joinı v.ntufes2-3 Crsh Paid for $e Prche of Tusiblc and Inıansible Als.l (341) (3 075)24 cash obüaincd ftom üe salc of Tesible and lnıansibtğ Asst 537 73|

25crü Piid fo. Aı.!ha!. ofFi..ncial Air.ls .ı Fair Valuc ]troügh o!h.ü conEEhcnsiv.

(25.4l2)

26c.sh obı.ind iiom th€ s5l€ ofFinrıcid Ass€G aı Fan vatuc Thİougn ühejcoİnDrchensiv. Incom. z57.|42

27 cash Paid fo. Pı]rchase ofFinalcial Ascls at Amonised cosi28 cash oblained From sale ofFinecial Asscts at ADo.tised cosl29 othcr

C. cAsIt Ft-()\\,s FRo]\l rt\A\Cl \(; .{{,Tl\lTlEs

lIl. İ-.l osh Drcvid.d aİo6 fin..cinr .cti!iıi6

]l Cash obtain.d From Funds Borrowcd and sccurities Issued32 Cash oulflow F.om Fund§ Borowcd dd Sccuriıie§ Issued]3 Eı]uity hıslfu mcııs lssDed]4 Di!idcnds Paid]5 P.vnents foİ Finde tf,e Liabilitiğs36 (İner

8,{95 .].{7,ılV. Efieı oıch..!. i. foİ.ign Etch..g. R.ı. o. c.sh ı.d Crst ı]quivıl€İ§

z12.892Nel i.cİ.ı§e ill cısh ıDd c.sh .quiv.l.nts (v-ı) lJ2.690

936.779 72],EE7Vl, cİsh ..d .ısh Ğouivıle.ts ı! besi..ins ofahe Deriod

1,1L Cısh ı!d cısh @uivılertts ıl.nd ofthe D.riod l 069..ı69 9J6.779

ll

ial statements

BANK MELLAT, MERKEZİ: TAHRAN-iRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMİR ŞUBELERİ

31 ARALIK 2020 TARİHİ İrinaRryr-.c. KoNsoLİDE OLMAYANşuBE,NiN MERJGziNiN KoNsoLiDE nix.q,xsar, TABLoLARI(Tutaİl8l aİsi belinilrnedikçe Bin Türk Lirası ("TL") olarak ifade ed ilmiştir.)

VII. PROFIT DİSTRIBUTION TABLE

siİc. it is consid€r.d üaı ıh€ incone amoünıs r.ıaıed to def.dei ğx ıar.ıs will noı b€ @natıİibutabI. to ü. subi.ül m.tt r of ü. P.İiod should nol b. subj..i io pfofiı disrribuıion

2.2

Od thğrcfore üğ podlon of üe proliılu as§€ıs wil] noı b€ subjecl to prcfit

distlibutioı.Th. Bnnch crlculated neı defencd ia incon. ofTL l]? due lo ü. @cuİ.cnccdefeE€d tax cxp.nsğ).

(*) cURRENT PERIoD.ovoln020 - 3l/l2n020\

PRroR Pl]RloI)(olnln0l9 - 3lll2n0l9\

I. DIsl,RIBt TIo\ oF Ct,RRf \-|,\,ı]AR l\co}lfı.l currenl year lncom€ ]9 ]58 45.u5l.z Ta\es And Duties PayabIe G) (E.7E9) (l0.938)1.2.1 Corporate Ta\ (Income ux) (8.926) ( l l,0l7)1.2.2 Income wilhholding tax1.2,3 oüeİ taxes and duti€s (+*) l37 ,79

\ET Iı-Co}lE poR THE }'EAR (1.1_ı.2) 30.569 31.101

l,] Prior Yea, Loss€s (-)

1.4 First Legal Rcs€rv.s (-)l5 oıher statutorv Reserves (J

NET I\coME AVAILABLI },oR D!STRIBIJT!oN l(A+t1.3+ı.t+1.5)l J0.569 31.101

l6 Fii§t Dividend To shareholdefs G)l,6.1 To owne.s ofofdinary shares1.6.2 To owners of preferred sharesl,6.] To owners of Prgferred shares (Preem9tive Righ§)l,6.4 To Profit sharing Bonds|,6.5 To Holders ofProfit And Loss sharing Cenificates1.7 Dividend§ To Personnel G)1.8 Dividends To Boaİd ofDirectoİs (-)1.9 sec.nd Dividend To Shaİeholders G)1.9 ı To owners ofordinary shares1.9.2 To owneıs of prefered share§ı.9.3 To owne.s ofPreferred Sha.res (Preemptive Righıs)1.9,4 To Pmfit sharinq Bonds1.9,5 To Holders ofProfit And Loss sha.inq cenificaEs1.10 second L€sal Reserves (-)1.1 l statutory Rescrves ()1.12 Extaaordinary Reserves1.13 otheı Reserves1.14 SDecial Funds

lI. DISTRlBt,TIoN oF R-EsERvDS

2.1 Distributcd Reservessecond Lesaı Reserves C)

2.3 Dividends To shareholders (-)

2.3.1 To o\ ners ofordinaJy Shares2.3.2 To owneıs of preferred shares2.3.3 To owneıs of preferred shaıesz.3.4 To Profit Sharing Bonds2.3.5 To Holde.s of Profit And Loss shafins cenifiçaEs24 Dividends To Personnel (-)2.5 Dividends To Boafd ofDireclors (-)

Ill IARNlNGs Pt]R sHARE

3.1 To owners of ordinaıv share§32 To o\ıner§ of ordinarv shares ( 9/o )

33 To oııners of preferred shares3.4 To owners of Preferred shaf€s ( % )

Iv DIvIDı]\D Pt]R SHARE

4.1 To owners ofordinary shares4.2 To owncİs ofordinarv shares ( % )4.3 To owncrs of prefened shares44 To owners of Preferİed shaİ€s ( % )

c)e,)

l2

". ""*2020 (3| D.c.inbcr 2019| TL 79

ca.

vItI. CONSOLIDATED FINANC|AL STATEMENTS OF THE BRANCH,S HEADQUARTER

As of20 March 2020, the financial statements issued by the Headquarters ofthe Branch is presented below

c)e)

The financial staıemenıs p.epared by the headquan€rs of ıhe Branch dated 20 March 2020 aİe presented.The prior Priod has been rEvised

BANK MELLAT ( IRAN )CONSOLIDATED COMPARATIVE BALANCE SHEET

(THoUsANDs oF UsD)CURRENT PERıoD (r)

(20 Mırch 2020)PRloR PERIoD f')

(20 Mırch 20ı9)

Cash and cash equivalcnts 5.|61.,196 3.673.05lcentral bank 3.8l6.982 2.958.948other a§sets 98.196.799 76.,121.0l8

lo1.780.917 82.759.0l7

Deposit5othcr liabiIities

29.183.18768.835.547

9.,762.243

2|.668.96256.313,4264.,l16.629shaIeholders' equity

Total Liabilities lo1.780.977 82.759.0l7

BANK MELLAT ( IRAN )CONSOLİDATED COMPARAT|VE STATEMENT OF INCOME

(THoUsANDs oF UsD)CURRENT PERıoD e)

(20 Mırch 2020)PRIoR Pf,RIoD (")

(20 March 20l9)

lntçrest and investmenı incomolnterest cxpen§e on depositsother expensesother incomeTotal net incomePersonncl and opçrating expen§esproıit before taxTaxes payables

6.020.924(3.676,I04)(ı.834.870)

5.196.9035.706.853

(3.531.152)2.115.10l

(1.095.8l8)

5.066.175(3,518.2,18\(ı.368.m8)

6.513.7826.692,77l

(3.480.475)3.2l2.296(ı l3.524)

Net ProfirLo§s !.079.EE3 3.098.772

ao

a

l3

BANK MELLAT, MERI(EZ|: TAHRAN-İRAN İsraxnuı TÜRKİYE MERKEZ,ANKARA VE izırİn şunrı,oni

31 ARALIK 2020 TARiHi irİna,Rryr,a KoNsoLİDE OLMAYANŞUBE,NİN MERKEZİNİN KONSOLİDE FİNANSAL TABLOLARI(Tutarlar aksi belirtilmedikçe Bin Türk Lirası ("TL") olaİak ifade ediImiştir.)

ı

Totıı A*.*,

BANK MELLAT, MERKEZİ: TAHRAN-iRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE iZMiR ŞUBELERi

3l ARALIK 2020 HESAP DÖNEMİNE AİTFiNANSAL TABLOLARA İı-işı<İx AÇIKLAMA VE DİPNOTLAR(TutaİIaİ aksi belirtilmedikçc Bin Türk Lirqll ("TL") olaıak ifade edilmiştir.)

I.

ıI.

SECTION THREE

EXPLANATIONS ON ACCOUNTlNG POLlCtES

EXPLANATİONS ON THE BASIS OF PRESENTAT|ON

The unconsolidated financial statements are prepared within üe scope of the "Regulaıion onAccounting Applications for Banks and Safeguarding of Documents" related with Banking Actnumbered 54ll published in the Official Gazette no.26333 dated l November 2006 and oüerıegulations related to repolting principles on accounting records of Banks published by BankingRegulation and Supervision Agency and circulars and interpretalions published by BankingRegulation and Supervision Authority (ıogether referred as BRSA Accounting and ReportingLegislation) and in case where a specific regulation is not made by BRSA, Turkish FinancialReporting Standards C'TFRS) and related appendices and interpretations (referred as "TurkishAccounting Standards" or "TAS") put into effect by Public oversight Accounting and AuditingStandards AuthoIity ("PoA") (all referred as "Reporting Standards"). The Branch maintains is booksin Turkish Lira in accordance with üe Banking Act, Turkish Commercial Code and Turkish TaxLegislation.

[n accordance with the "communiqud amending the communiquğ on Financial statements andRelated Disclosures and Footnotes to be Announced to Public by the Banks" published in the oflicialGazette dated l February 2019 and numbered 30673, the previous period's financial statements weremade compatible with the new fınancial statement formats.

The Branch complied with the provisions of TFRS 9 Financial Instruments (.'TFRS 9"), which cameinto force to be effectiYe as of January l, 20l8, on the classification and measurement of fınancialassets, and is an exception to the impairment provisions. The current period financial statements oftheBranch are shown in the format of the financial statements valid for banks that do not apply TFRS 9as announced by the BRSA.

Expıanations on TFRS l6 Leasing Tran§actions

TFRS l6 standaİd eliminates the bilateral accounting model, which is the current Practice for tenants,showing financial leasing transactions on the balance sheet and operational leasing transactions off-balance §heet. Instead, a single balance sheet-based accounting model is introduced, similar to thecurrent lease accounting. Accounting foı tenants continue§ substantially similar to existing practices.TFRS l6 has no impact on the f'inancial statements ofthe Branch.

EXPLANATIONS ON STRATEGY OF USING FINANCIAL INSTRUMENTS ANDFOREIGN CURRENCY TRANSACTIONS

The Branch's operation scope involves all commercial banking opeıations and business linesdescribed in the banking legislation.

The Branch invests the funds obtained through fixed rate deposits, loans fiom Head office and cashguarantees to short-term, high interest bearing and risk bank placemenls and credit forbanks. The Branch manages the liquidity riskfoı its current and contingent liabilities. Instructure which matches liabilities due,

t cash and cash equivalent sources

aa

s1text,idirg

ch aims at ensuring a liquidity

The accounting policies and valuation principles used in the preparation of the fuıancial statementshave been determined in accordance with üe regulations, communiquCs, explanations, and circulaıspublished by the BRSA ıegarding lhe accounting and financial reporting principles. Where notananged, it has been determined according to the principles within the scope of TAS / TFRS (alt ofwhich are "BRSA Accounting and Financial Reporting Legislation") put into effect by PoA.

BANK MELLAT, MERKEZi: TAHRAN-iRAN İsr,c.Nnuı TÜRKiYE MERI(EZ,ANKARA vE izvrin şunnı,nni

(Tutallaİ aksi belirtilrnedikçe Bin Türk Lirasl ("TL") olaİak ifade edilİni ştir-)

EXPLANATIONS ON ACCOUNTlNG POLICIES (Continued)

Il. EXPLANATIONS ON STRATEGY OF USING F|NANCİAL INSTRUMENTS ANDFoREIGN cURRENcY TRANSAcTıoNs (continued)

The Branch protects itself from inte.est rate risk, currency risk and price flucfuations by itsinvestments in short-term placements and provides cash collaterals.

The Branch takes a position according to the currency basket of the Central Bank of the Republic ofTurkey ("CBRT") in order to hedge itself against possible foreign exchange risks. The Branch withthe change in üe currency system to floating curıency, limiis the total foreign cunency position inaccordance with üe legal limits because ofüe increasing uncertainties in the changing currency path.

As of 3l December 2020, rates used for conversion offoreign cunency balances into Tu*ish Lira aıeTL 7,4194 fol USD, TL 9,1164 for Euro and TL 0,07l805 for Yen.

lIİ. EXPLANATIONS ON lNVESTMENTS IN ASSOCIATES AND SUBSIDIARIES

As of 3 l Decembet 2020 artd 3 l December 20 l 9, üe Branch has no investments in associates andsubsidiaries.

Iv. EXPLANATIONS ON FORWARD TRANSACTIONS, OPT|ONS AND DERryATIVEINSTRUMENTS

Liabilities and receivables arising fiom the derivative instruments are followed in üe off-balancesheet accounts at üeir contractual values. Derivative inshuments are initially recorded at üeir fairvalues at the date of occurrence. If the fair value of derivative financial instruments is positive, it isdisclosed under the main account "Derivative financial assets at fair value through profit or loss"; andif the fair value difference is negative, it is disclosed under "Derivative financial liabilities at fairvalue through profit or loss". Fair value changes for derivatives are recorded in the account of"profivlosses from derivative financial transactions" within üe income statement.

The fair values oflhe derivative financial instruments are calculated using quoted market prices or byusing discounted cash flow models.

The Branch has no option contracts oİ derivative instruments for risk protection. The Branch has noforward transactions, options and deriYative instruments.

EXPLANATIONS ON INTEREST INCOME AND EXPENSE

Inteİest income and expenses aıe recognised in the income statement on an accrual basis using üeeffective inteıest method. The Branch, ceases accruing interest income on non-performing loansaccording to the related regulation.

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ExPLANATloNs oN AccouNTING PoLIcıES (continued)

All type of fees and commissions collected from customers regarding cash loans are deferred in"commissions on cash loans" account and are recognized as income over the period of the |oan bydiscounting with effective interest rate.

The commissions related with non-cash |oans or periodic banking services, are deferred aıd recordedas income over the period according to the cut-off principle. Credit fee and commission expenseswhich are paid to oüer companies and institutions regarding iınancial liabilities and which createoperational costs are discouDted by effective interest rate aıd are recorded as expenses in ıhe relevanıperiod according to the cut-off principle.

EXPLANATIoNS oN FlNANclAL AssETsThe Branch categoriz€s is financial assets as fair value through profit/Ioss, fair value ürough othercomprehensive income or measured at amortized cost. Such financial assets are recognized orderecognized according to TFRS 9 Financial lnstruments Part 3 Issued for classification andmeasurement of the financial instruments published in the official Gazette No. 29953 dated 19January 20l7 by üe Public Oversight Accounting and Auditing Standards Authority. Finarıcial assetsare measured at fair value at initial recognition in üe financial statements. During the initialrecognition of financia| assets other than "Financia| Assets at Fat Value thİough Profiı or Loss",transaction costs are added to fair value or deducted fiom fair va|ue.

The Branch recognize a İınancial asset into financial staıements when it becomes a party to üecontracfual terms of a fmancial instrumenı. During üe fırst recogniıion of a financial asseı into üefinancial statements, business model determined by Branch management and the nafure of contracfualcash flows ofüe financial asset are taken into consideration.

ı. Financial ıss€ts at fair value through prolit or loss

Financial assets at fair value through profiVloss" are financial assets other than the ones that aremanaged with business model that aims to hold to collect contracfual cash flows oı business ınodellhat aims to collect both üe contracfual cash flows and cash flows arising from üe sale of the assets;and if the contractual terms of the financial asset do not lead to cash flows represenıing solelypaymens of principal and interest at certain date; that aIe either acquiİed foİ generating a profit fromshort-term flucfuations in prices or are financial assets inc|uded in a portfolio aiming to short-termprofit making. Financial assets at üe fair value through profit oı loss are initially recognized at fairvalue and remeasured at üeiİ fair value after recognition. All gains and losses arising from thesevaluations are reflected in the income statement.

Marketable secuıities that aıe classified as financial assets at fail Yalue thİough pıofit or loss areaccounted with their fair values.

Accounting policies related to derivative f'inancial ins§lments at fair value through profit or loss areexplained in section Ill. Footnote IV.

EXPLANATIONS ON FEE AND COMMISSION INCOME AND EXPENSESFees and commission income/expenses are accounted according to the principles of TFRS 15"Revenue fIom contracts with customers", excePt for th€ integral part ofthe effective interest rate offinancial instruments measured at amortized cost.

Income on banking services which aıe not related to periodic services are recorded as income whenthey aİe collected. In order to c|assiğ the fees and commissions collected from customers as incomeon banking services or as other non-interest income, üey shouldn't be related with a credittıansaction.

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EXPLANATlONS ON ACCOUNTlNG POL|CIES (Continued)

VlI. EXPLANATIONS oN FlNANCIAL ASSETS (Continued)

b. Financial Assets at Fair value Through Other comprehensiye Income

ln addition to Financial assets within a business model that aims to hold to collect contractual cashflows and aims to hold to se|l, financial asset with contractual terms that lead to cash flows are solelypayments of principal and interest at certain dates, they are classified as fair value through othercomprehensive income.

Financial assets at fair value through other comprehensive income are recognized by addingtransaction cost to acquisition cost reflecting the fair value ofthe financial asset. After the recognition,financial assets at fair value through other comprehensive income are remeasured at fair value.Interest income calculated with effective interest rate method arising from iinancial assets at fair valuethıough other comprehensive income and dividend income from equity securities are recorded toincome statement. "Unrealized gains and losses" arising from üe difference between üe amortizedcost and the fair value of financial assets aı faiı value ürough oüer comprehensive income are notİeflected in the income statement of the period until the acquisition of the asset, sale of the asset, thedisposal of the asset, and impairment of the asset and ihey aıe accounted under the "Accumulatedoüer comprehensive income or expense to be reclassified through profit or loss" under shareholders'equity. Accumulated fair value differences under equity aİe reflected to the income statement whensuch securities are collected or disposed.

During initial recognition the Branch can choose in an irrevoçable was to record the changes of tlüefair value of the investment in an equity instrument that is not held for trading purposes in the othercompıehensive income. In the case of this prefeıence, the dividend from th€ investment is taken intothe financial statements as profit or loss.

Equity securities, which are classified as financial assets at fair value through oüer comprehensiveincome, that have a quoted market plice in an active market and whose fair values can be reliablymeasured are canied at fair value. Equity securities that do not have a quoted market price in an activemarket and whose fair values cannot be reliab|y measured aıe carried at cost.

c. Financial Assets Measured at Amortized cost

Financial ossets measured al amorıized cosı

Financial assets that are held for collection ofcontracfua] cash flows where üose cash flows representsolely Payments ofprincipal and interest are classified as financial assets measured at amortiz€d cost.

Financial assets measured at amortized cosı are initially recognized at acquisition cost including üetransaction costs which reflect the fair value of üose insıruments and subsequently recognized atamortized cost by using €ffectiye inteİest rate method. Interest income obtained fiom financial assetsmeasured at amortized cost is accounted in income statement.

Loons

Loans are financial asseıs that have fixed or determinable payments terms and are not quoted in anactive maİket. Loans are initially recognized at acquisition cost plus transaction costs presenting theirfaiı value and theıeafter measured at amortised cost using the "Effective Interest Rate (interna| rate ofreturn) Method" .

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VllI.

EXPLANATIoNS oN AccoUNTING PoLlcIEs (continued)

EXPLANATIONS ON IMPAIRMENT OF FINANCIAL ASSETS

Within the scope of the authorization glanted to üe Branch from BRSA numbered 32521522-l01.02.02.-E.225 and dated 5 January 20l8, the Branch has not applied the provisions regarding theimpairment ofTFRS 9 effective as of l January 20l8.

The Branch caltulated and accounted allowances for impaiıment of financial assets in accordanc€with the "Regulation on the Procedures and Principles for Classification of Loans by Banks andProvisions to be set aside " published in the ofncial Gazette No. 29750 dated 22 June 2016 andeffective as of l January 20l8, "General and specific provisions to be allocated to banks that do notapply TFRS 9 ".

The Branch provides specific allowances for loan and other receivables in accordance wiü "Methodsand Principles for the Determination of Loans and other Receivables to be Reserved fol andAllocation ofReserves" and offset against oyerdue ]oans in the assets.

Financial assets and liabilities are offset and the net amount is reported in üe balance sheet when theBranch has a legally enforceable right to offset the recognised amounts and there is an intention tocollecVpay related financial assets and liabilities on a net basis or to Iealise the asset and settle theliability simultaneously.

x.

Securities sold under repurchase agreements, are followed in accordance with the Uniform Chart ofAccounts according to the purposes of keeping in üe Branch portfolio. Funds obtained in refum forrepo conhacts are recorded in liabilities. The expense accrual is calculated accoıding to the "effectiveintelest (internal efficiency) rate method" for the part ofthe difference between selling and repurchaseprices determined by the relevant repo agreements.

xl. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS AND EXPLANATIONSON OBLIGATIONS RELATED TO THESE ASSETS

The Branch has no discontinued operasheet date (3l December 2019: None).

tions and obligations |ated to these assets as at the balance

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IX. EXPLANATIONS ON OFFSETTING FINANCIAL INSTRUMENTS

In cases where the fair values of financial assets at fair value through oüel comprehensive income areless then their recorded values, a provision for impairment is allocated, and the net value is shown onthe balance sheet.

EXPLANATIONS ON SALES AND REPURCHASE AGREEMENTS AND SECURITİESLENDING TRANSACTIONS

Funds given against securities puıchased undel agreements ("reverse repo") to resell are accountedunder "Receivables from Reverse Repurchase Agreements" in the balance sheet. The differencebetween the purchase and determined resell price is accrued over the life of repurchase agreementsusing üe "effective interest method",

The Branch has no sales and repurchase agreements and securities lending transactions as of 3lDecember 2020 and 3l December 20l9.

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ExPLANATIoNs oN AccoUNTING PoLlClES (Continued)

XIl. EXPLANATIONS ON GOODWILL AND OTHER INTANGİBLE ASSETS

The Branch has no goodwill as of 3l December 2020 and 3l December 20l9.

lntangible assets consist ofsoftwares. The intangible assets are amortized in their useful Iifes, between3 years, on a stıai8ht-line basis. Aı the balance sheet date TL lto of aİnortization expense (3lDecember 20l9: TL 216).

XlIl. EXPLANATİONS ON TANGIBLE FIXED ASSETS

Property and equiPment is measuıed at its cost when initially recognised and any diİectly attributablecosts of §etting the asset in \.vorking order for its intended use are included in the initial measurement.Subsequently, property and equipment is carried at cost less accumulated depreciation andimpairment, if any.

Depİeciation is calculated over of üe cost of PropeIty and equipment using the straighı-line m€thodThe expected useful lives are stated below:

BuildingsFumifure, fıxture and vehicles

50 year5 year

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The depreciation chaıge for items remaining in property and equipment for less ıhan an atcounıingperiod at üe balance sbeet date is calculated in proportion to üe period the item ıemained in propertyand equipment.

Where the carrying aİnount of an asset is greater than its estimated recoverable amount, it is written-down immediately to its reçoverable amount and the impairment for üe diminution in va|ue ischarg€d to the income statement.

Gains and losses on the disposal of property and equipment are determin€d by deducting the net bookvalue ofüe property and equipment ftom its sales revenue.

Expenditures for the repair and renewal of property and equipment are recognised as expense. Thecapital expenditures made in oıder to increase üe capacity of the tangible asset or to increase itsfufure benefits are capitalised over the cost of the tangible asset. The capital expenditures include üecost components which are used either to increase the useful life or the capacity of Üe asset or Üequality ofthe product or to decrease the costs.

There are no pledges, mortgages or purchase commitments on property and equipment as of3l December 2020 and 3l December 20l9.

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BANK MELLAT, MERKEZİ: TAHRAN_İRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE izılin şunnırni31 ARALIK 2020 HESAP DÖNEMİNE AiTFiNANsAL TABLoLARA iı,iş«iı,t AçIKLAMA vE DipNoTLAR(Tutaİlal aksi belirtilmedikçe Bin Türk Lirası ("TL") olarak ifadc edilmiştir.)

EXPLANATIONS ON ACCOUNTING POLICIES (Continued)

EXPLANATIONS ON LEASING TRANSACTIONS

The branch records the Iight of use and the lease obligation in financial statements on üe date whenthe leasing acfually begins. The right of use asset is initially measured at its cost value and üenmeasures over accumulated depreciation and accumulated impairment losses and corrected accordingto the Ieass€ssment ofthe lease liability. with the'TFRS 16 Leases" Standald, effective as of January1, 2019, üe differençe between operational lease and fuıancial lease has disappeared. Leasingtransactions w€re started to be displayed by the tenants under the item "Tangible Fixed Assets" inassets as assets (right to use assets) and undeı "Liabilities fiom Leasing Operations" in liabilities. Asa lessee, the branch will reflect the right ofuse and the lease obligations to finaıcial statements.

Accounting for the lessor is similar to previous accounting policies.

The Branch has no leasing tansactions as of31 December 2020 and 31 December 20l9.

XV. EXPLANATIONS ON PROVISIONS AND CONTINGENT COMMITMENTS

Provisions and contingent liabilities are accounted in accoıdance with "Turkish Accounting Standardfor Provisions, Contingent Liabilities and contingent Assets" (.'TAS 37).

Provisions are recognised when the Branch has a present legal or constructive obligation as a result ofpast events, it is probable that an outflow of resources embodying economic benefits will be requiredto settle the obligation, and a reliable estimate ofthe amount ofthe obligation can be made.

The provision foI contingent liabilities arising from past events should be recognised in the sameperiod of occunence in accordance with the matching principle. When the amount of the obligationcannot be estimated and there is no possibility of an outflow of resources fiom the Branch, it isconsidered that a "contingenf' liability exists and it is disclosed in the related notes to the f'inancialstatements.

XVI. EXPLANATIONS ON OBLIGATIONS RELATED TO EMPLOYEE RIGHT§

a. Defined Benefit Plans

Under üe Turkish Labour Law, üe Branch is obliged to pay a certain employment termination benefitto the employe€s who haYe been retired or whose employınent is terminated other tharı üe reasonsspecified in lhe Turkish Labour Law.

[n accordance with "Turkish Accounting Standard for Employee Rights" ("TAS 19") the reserve foremployment termination benefits is calculated by using Projection Method based on personnel servicecompletion time and previous experience gained. The reserve for employment termination benefits isdiscounted by the rate of refum of üe govemment bonds at üe balance sheet date.

Branch Management has evaluated the impact of üe açtuarial profiVloss for calculating üeemployment termination benefit on the current balance sheets and recognized the effect in üestatement of income, since it's not material for the fıııancial statements.

The Branch has no employees who are members ofany foundation or likewise corporations.

b. Defined contribution plans

In accordance with the law the Branch is obliged to pay a contribution fee to Social securitylnstifution ("Ssr') on behalf of the emplemployees oı "SSI". These contributionaccrual.

o other payment obligations tosonnel expenses at the date of

oyees has n

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xvI.


ExPLANATloNs oN oBLIGATloNs RELATED To EMPLoYEE RlGHTs (continued)

c. Short-Term Benerits to EDpıoyees

Vacation fees defined as "Short-Term Benefils to Employees" in accordance wiü "TurkishAccounting Standard for Employee Rights" C'TAS l9") are accrued in the periods üat they wereentitled to and they cannot be discounted.

XVlI. EXPLANATİONS ON TAXATION

a. current tax

ln Turkey, corporate ıax rate |s 20yo. However, according to Law No: 706l "The Law regardingamendments on Certain Tax Laws and theiı implications on Deferred Tax Calculations" published inthe ofİcial Gazette dated 5 December 20l7, corporate tax rate will be applied as 22% for the threeyeaİ p€riod between 2018 and 2020. The corporate tax rate is applied to tax base which is calculatedby adding certain non deductible expenses for tax purposes and deducting certain exemptions (likedividend income) and exclusion of deductions on accounting income. If there is no dividenddistribution, no further ıax charges are made.

Dividends paid to non-resident corporations, which have a place of business in Turkey or are residentcorporations, aİe not subject to withholding tax. otherwise, dividends paid ale subject to withholdingtax at üe rale of |5vo. An incİease in capital via issuing bonus shares is not considered as pıofiıdistribution and üus does not incur withholding tax

corporations aıe required to pay advance corporate tax quaIterly on theif corporate income withcurrent rate. AdYance tax is declared by the l7th day and paid by üe same day of the second monüfollowing each calendar quarter end. Advance tax paid by corporations which is for the cunent periodis credit€d against the affıual corporation tax calculated on üeiı annual corporaıe income in thefollowing year. Despite the offset, if there is temporary plepaid tax remaining, this balance can berefunded or used to offset any other financial liabilities to the goverrment

Affiliate shares that held for at least two years and profits arising from the sale ofthe real estates aretax-exempt on the conditions that adding of 75% portion of the afnliate shares that held for at leasttwo years and 50% portion of profits arising from the sale of üe real estates to the ğpital asprescribed by üe Corpolate Tax Law or keeping ofttıese in a special fund account for five years.

Under the Turkish corporate Tax Law, losses can be carried forwaİd to offset against fufure taxableincome for up to five years. Tax losses cannot be carried back to offset profits fiom previous periods.In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companiesfile their tax retums until the last day ofthe following fourth month after the closing ofüe accountingyear to which üey relate. Tax letums are open for fiVe years from the beginning ofthe year followingüe date of filing during this period the ıax authorities have the right to audit tax retums, and therelated accounting records on which they are based, and may issue re-assessments based on theirfindings. current ıax, related to iİems recognized directly in equity is also credited oI charged directlyto equity.

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3r ARALIK 2020 HESAP DÖNEMiNE AİTFiNANsAL TABLoLARA iı-işrcix AçıKLAMA vo oipNoııaR(]'utarlar aksi belirtilmedikçe Bin Türk Lirası ("TL") olarak ifade edilmiştir.)


XvIl. EXPLANATIONS oN TAXATION (continued)

b. Deferred Tax:

Deferred tax liabilities are recognized for all resulting tempoIary differences whereas defened taxassets resulting from tempoIaıy differences are recognized to the extent that it is probable that fufuretaxable profit will be available against which the defened tax assets can be utilized. The calcu]ateddeferred tax assets and defened tax liabilities are presented on a net basis in these financialstatements.

Deferred tax benefit balance resulting from netting of defened tax assets and liabilities should not beused in dividend distribution and capital increase.

XVIII. EXPLANATIONS ON BORROWINGS

Trading financial liabilities and derivative instruments are valued at the faiı value and other financialliabilities are carried at amortised cost using the "effective inteIest method".

The Bank utilises Various hedging techrıiques to minimise the liquidity, interest rate and currency risksof its financial liabilities. The BIanch has no markeıable securities issued and convertible bonds.

XIX. EXPLANATIONS ON ISSUANCE OF SHARE CERTIFICATES

Dilect üansaction costs legaıding the issuance of share c€rtificates are recorded undeı shareholders'equity after eliminating the tax effects. The Branch has no share certificates issued as of3 [ December2020 and 31 December 2019.

XX. EXPLANATIONS ON ACCEPTANCES AND AVAILED DRAFTS

XXI. EXPLANATIONS ON GOVERNMENT GRANTS

The Branch has no govemment grants at as of3l Deçember 2020 and 3l December 2019

XXII. EXPLANATIONS ON PROF|T RESERVES AND PROFIT APPROPRIATION

Retained eamings are available for profit distribution, subject to the written permission ofBRSA

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The Branch calculates and accounts for deferred income taxes for all tempoıary differences arisingbetween the tax bases of assets and liabilities and their carrying amounts in üese fnancial statementsin accordance with "Turkish Accounting Standard for Income Taxes" C'TAS 12) and the relateddecrees ofthe BRSA conceming income taxes. In the deferred tax calculation, the enacted tax rate, inaccordance with üe tax legislation, is used as ofthe balance sheet date.

Deferred tax, related to items recognized directly in equity is also credited or charged directly toequity.

Avalied drafts and acceptances are the contingent liabilities of the Braıch and are included in the off-balance sheet commitments.

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EXPLANATIONS ON ACCOUNTING POLlClES (Continued)

XXlIİ. EXPLANATIONS ON EARN|NGS PERSHARE

Eamings per share disclosed in the income sİatement is calculated by dividing net profit for the year tothe weighted average number of shares oulstanding during the period concemed. ln Turkey,companies can increase their share capital by making a pro-rata distlibution of shares "bonus shares"to existing shareholders fıom retained eamings. Such "bonus shares" distlibutions aıe ireated a§issued shares in eamings per shale calculations. Accordingly, the weighted average number of sharesused in these calculations is determined by taking inlo account the retrospective effects of such shareissuances. lf the issued share price increases after the balance sheet date but only because of thedistribution ofthe bonus shares prior to the prepalation date ofthe financial statements. the calcuIationof eamings per shaıe is made considering the total new share name. Earnings per share have not beencalculated since the branch is not publicly traded.

XXİV. EXPLANATIONS ON RELATED PARTIES

For the purpose of üese fınancial statements, shareholders, key management personnel and boardmembers together with their families and companies controIled by/affiliated with üem, and associatedcompanies aıe considered and referred to as related panies in accordance wiü "Turkish Accountingstandard for Related Parties" ("TAs 24"). The transactions with İelated pa.rties are disclosed in detailin Note VII ofSection FiVe.

XXV. EXPLANATIONS ON CASH AND CASH EQUIVALENTS

For the purposes of the cash flow statement, cash includes cash, effectives and demand depositsincluding balances with the Central Bank; and cash equivalents include interbank money market

Placements and time deposits at banks with original mafurity periods ofless üan three months.

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ExPLANATıoNs oN AccoUNTlNG PoLIcIES (continued)

XXVİ. EXPLANATIONS ON SEGMENT REPORTING

Information Ielated with aıeas of operations of the bank prepaıed in line with üe organizational andintemal reporting strucfure of the branch and in accordance with "Turkish Financial ReportingSİandaıds related with Segment Reporting" ("TFRS 8") are disclosed.

Ttıe Branch manages its baııking operations tkough three strategic business units: Retail banking,corporate and commercial banking and Treasury operations.

Retail banking provides deposis and loans to individual and small business customers. other productsand services include foreign currency exchange, cheques and biIls and money orders.

Cor?orate and Commercial banking provided corporate and commercial customers financial solutionsand banking services. Products and services include FC and TL loans, foreign trade İınance, domesticand intemational non-cash credit line facilities such as letters of credit and guarantees, for€ignexchange and deposits.

Treasury operations are managed by the Tİeasury Department. The Treasury Department hastransactions such as purchases-sales of domestic marketable securities and TL and Fc placementtransactions.

lnformations about üe operating segments as of 3l December 2020 aİe presented on üe table below:

(l) segment asses in üe other column smount to TL 13,266: TL 10.8ı9 include§ (angible fixed asseİts, TL l93 ofintangibleasseıs. TL l 0ı4 ofdeferrcd ırx assel and TL 1.262 ofoıherof oıher l iabiıities, TL l l .288 of provisions and TL l ,793

ReııilBanking

corpoİataand

commerciılBınking

Totıloparıtions

otheİ(') ofthe Brınchı Jınuıry - 3ı D.c.mbcr 2020

Intere§ı IncomeNet Fe€s and commission§ lncomeotheİ operating Income and TradingInc-ornd(Loss) (Net)

oparııing Ravanualnteİest Expenseother operatin8 Expenses and Provision for[mpairment ofLoans and other Receivables

operıting Expcnseop.rıting Profit

]3 28.1214.5

26.42|]3

020.t23

(386)59.ı2

(389

(2.583)(2.st3)(2.sso)

(l2.9l6)(12.9t9}

25.346

(3.875)(4.26ı)ı6.562

(l9.374(ı9.763

Profit Bcforc -l'ıI 393st

(8.789)

J).s69

corporatc Ta\ (8

Net Profit

3l De.embcr 2020Segment Asseıs (|)

Totıl Asr.t3segment Liabilities (ı)

2.6t12.6t7

62.449

|.079.4221.019.422

608,090

l3.2E8l3.2t811.434

489.564

506.996

1.236.93

747.37

Shareholders'EquityTotıl Liıbiliti.§

489.559.J98 62.449 608.090 .236

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t7.434 ofoüer liabilities c.mprise TL 4.353

Treı!ııry

20.823_

l41.538ı4ı.53t59.]98

1.2654.519

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(3)

BANK MELLAT, MERKEZi: TAHRAN-İRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE iZMiR ŞUBELERi

3l ARALIK 2020 HESAP DöNEMiNE AiTFiNANsAL TABLoLARA iı,iş«iN AçIKLAMA vE DipNoTLAR(Tutaılaı aksi bclirtilmedikçc Bin Türk Lirası ("TL") olarak ifade edilmiştir.)


xxu. ExPLANATloNs oN SEGMENT REPoRTING (conıinued)

(l) segmcnı asseıs in ü€ oü€r column amount !o TL 12,556; TL t 1.0l1 includes ırngible fixed assefts, TL ı9l ofintangibleassets, TL 916 of deferred tax asset and TL,140 ofothe. assets, and TL 15.055 of oüeİ liobilities c4mprise TL 2.429 ofoth€r liabilities, TL 9.,ı43 ofprovisions and TL 3,I83 of cu.rent tax liability.

xxvl. REcLAssIFlcATIoNs

There are no reclassifications to the 3l December 2020 financial statements in order to be inconformity with the financial statements ofprevious period.

XXVII. OTHERINFORMATION

corporııGınd

Ratıiı commercialBınking Bınking Traa!ury

42.740

Totıloptration!

Otherl') ofıh. Brınchı Jıauıry - 3ı D.c.mbcİ 20ı9

lntaresı lncomeNet F€e§ and commi§§ion§ lncomeolher opemting Income ond TradingIncome/(Loss) (Net)

operıting Ravanuelnıerest Expensaotİıer opcratint Expen§€s aııd Provision forIrnpairment of Loan§ and oü€r Reccivables

op.rııing Erp.ıi.op.rıaiog Profiı

2l 3.848l0.469

46.6ül0.469

l0.6l l24.92t

(3)42.140

(829)

l0.6l l61.6t9

(832)

(2(2.(2.

59'7')

597)576)

\4.329')(5.ı5t)37.5t2

(21.2l2)(22.M4|

45.645

Prolit B.for. Tıİcoapoaate Tax

N.t Pİolit

45.64s(l0.938)

u.707

45.645(! 0.938)

34.701

3t Decembcr 20ı9Segment Assets (l)

Tot l Assttlsegm€nı Liabilitie§ (l)

sharehold€r§' EquityTotıl Li.bilitiCr

69.26269.26243.417

4.1344.ı34

Ig.632

l2.558l2.55tl5.055

45E.E3E473.t93

1.023,390ı.O2JJ90

564.552458.838

ı.OııJ9013.477 164.632 34lJ8E

ı

a

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a

25

None.

,i

(l4.286)(t4.2E9)

ı0.(]9

931.436937,436341.36E

BAIIK MELLAT, MERKEZİ: TAHRAN_İRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMİR ŞUBELERİ

3ı ARALIK 2020 HESAP DÖNEMİNE AiTFİNANsAL TABLoLARA iıişrix AçIKLAMA vn ıipxorıan(Tutaİlar aksi belirtilmedikçc Bin Türk Lirası ("TL") olaıak ifade edi 1miŞtir.)

SECTION FOUR

INFORMATION RELATED TO FİNANCIAL STRUCTURE OF THE BRANCH

EXPLANATIONS ON SHAREHOLDERS, EQUITY

Total capital and capital adequacy ratio have been calculated in accordance with the "Regulation onEquity ofBanks" and "Regulation on Measuremenı and Assessment of Capital Adequacy ofBanks".

The capital adequacy ratio ofthe Branch o/o84,29 (3l December 20l9: %90,86)

a. lnformation on shareholders' equity:

ıpplic.ıio.

ı/trOı4 f)

Com6otr Equity Ti.İ ı c.PitılPaid-in copitrl to b€ Entitl.d for compctts!ıion aftr. All creditoİsshare pfemiums

Gains ,€flected to equity accrıdi.g to Turkish Accounting standaİds (TAs)Profit

cunent period profitprioı p€riod profit

Bonus shaıes from Associatcs, subsidiaries and Joint_venfuıes nol Accounted in cuııenıperiod's profit

coDEon Equity Ti.r ı c.pitıl Bcfor. D.dııctio.!D.duction! FroEı comtDon EquityTiĞr I cıpitılvaıuation adjustın€nıs calculat d as pcr üe anicle 9. (i) of lhe Regulaıion on Baıık capitalcufrenı ard Prior Periods' Losses not covered by Rescıves, and Los§es Accounted und€rEquity ıcrording lo TAs G)Lea§ehold lmpİovemenıs on operational Leases G)Goodwill Netted with Deferİed Tax Liabilitie§oth€İ |ntangibl. Ass€ts Netted wiıh D€ferİ€d Tax Liabilities Except Mortgag€ s€.vicingRighlsNet D€f€red Tax Asseyliability C)Difrerences aris€ ırhen a§sels and liabilities not held aı faiİ value, are subjccted to ca§hflow hedg€ accountingTotal crediı losses üaı exc€ed lotal €xp€ctrd loss cnlculated according to üe Regulation oncalculalion ofcıtdit Risk by Inı.mal Ratings Bı§ed Approachsecufitizaıion g8ins

Unrealized gıins and losses fiom chan8es in bank's liüilities' fai. value§ du€ ıo changes incıeditıronhine§§Net ünount of defin€d b€nelıı plansDirect and Indirect lnve§t nenıs ofüe Baİık on its own Tieİ l capital ()shares obtained agsinst Anicle 56, Paragraph 4 ofthe Banking Law (-)

Total ofNet Long Positions ofthe Investnents in Eqırity ltem§ ofunconsolidated Banksand Financial Institutions *here üe Bank owns l0% o, less ofıhe Issued shsre capitalExceeding lhe ı0% Thİ€shold ofabove Tier l capit l G)Total ofNet Long Po§iıions ofü€ Llvestrnenls in Equity ltems ofunc.ıısoıidated Banksand Financial lnstinıtions wheİe üe Bank o*İıs lflo oİ moae ofüe l5sued shaİe capitalExceeding üe ı oplo ThİEshold of above Tie, l Capitaı G)Moİıgage servicing Righıs Exceeding the l0.4/o Th.e§hold ofTier I capital (.)

Net Deferred Tax Asseıs arising ftom Temporary Diffeıenc-es Excaediııg the l oplo

Threshold of Tic. l capital G)Amount Exc.eding the 15% Tııreshold ofTie, I Capital as per üıc Anicle 2, clau§€ 2 ofüe R€gulalion on Measurement and Asses§meıt ofcapital Adequacy Ralios of Banks G)The Ponion ofNet Long Position of the Inves§nent§ in Equity lt€ms ofunconsolidatedBank§ and Financial lnstifutions where üe Bank olrn§ loplo or more ofüe Issued share

200 000

9ı654

26t.594]0.569

258.025

{69,56.1

(I93)(1.0l4)

( l 9] )

capiıal not dcductcd l'rom Tier l capital G)Mortgage servicing Righ§ not deducted G)Excess Amount aai§inq ftom Dğferaed Ta\ Assets from

ll -z:ı. \ı _ lja

2

'ıllı,

I.

a

Jl D«.bb.r2020

Illnol1TotılD.ductio.! f.on cooDo. Eqüty Ti.r l cıPiı.tTohlcoDnoD Eqlity Tier l cıpiıılADDIT|ONAL TIER ! CAPITALPr.f.rr€i sıock noı Included in conmorı Equity Tieı I capila] aüıd ü. R€lat€d shır. Pr.miumsD.bt lnst Me nts ,.d the Relatcd ıssı@e Pr.nim! Dcfin.d by ü. BRSAD.bt ln§tnİn.nts and ü. Rclıt d l§su§ce Prcmiüns Dcfitı.d by ü. BRSA (cov.red by TmPoBİyAnicl.4)Addiıioııl Ti.. I Cıpiü| b.fo..IHü.tioı.aHucrio.t fİoD Adüiio.ıl Ti.İ I cıatılDr.cl İİd IİdiİE ı Invcsın.nt§ ofthe Ba.İ on iıs own Additional Ti.r ı capiı.il (_)

lnv.si!ığıis iı Eqüity ]ıslrum.nls l§su€d by Bank or Filtaılciaj Insrifulions tnvan.d io Bİık'sAdditiodal Ti.İ t C.pibl aİd liaving conditioff sbl€d in ü. Anicl. 7 ofü. R.8ulıtiodToı.l ofNc. Loog Positio,§ oftlt. Iıv€srnenı§ in Equity llcms of Uıconsolidaıd Daıks ald Finaı.idlo§ifuiiorıs wh.r. ü. Ballk o*ns l0% or l€s§ ofüe Is§ılcd sharc capilıl Eıcr.ding üc l0 /.Thlcshold of5bov€ Ticİ l capital G)Thc Toüal of Ncl Long Position ofıh. D.ect o,Indir.ct lnv§tııl.rıls in Additonal Ticr I capiı.l ofUnc.nsolidaı.d Balk§ and Fitfucial Instifuiio.İ whdc ü. B.nİ oms moİ. lhİn l 0ol" of dte lsu.dsha.. ca9ilal G)oıİ.r items ıo b. defined by üe BRSA c)ll.İıs ıo b. D.duct d fmm Ti.r I C.pii.1duİi"g lh.Tnıritio. P.riodGood*ill d oıher Inırgible Assets and R.laı.d D€ferred Taİ€s nol deducted ftom Tier t capilaj asp.r üe Temporn y Alticle 2, clau§€ l ofth. Re8ulalion on Me.juremenı Dd A§s.sffient of caPitalAd.quacy Ratios of Baıks (-)N.ı D.fcrİed Td As§evliability nol deducted ftom Ticr I capnal as p.r lhğ T€mPonİy Anicle 2,claus. l of üe Regulalion on Mea§uremeoı and Asse§§m€nı of crpiial Adcqüacy Ratios of Ba*§ (-)

D.duction from Addiıional Tier l capitil when üğr. is noı cnough Ti.r rI capiıa] C)Torıl D.ductioı! f.oE Addiıionrl Tie. ! CıpiiılToİl AddiıioDıı Tie. I cıpitılToıı1 Ti.r I C.pit l Cti.r I cıpitıl= connoı f,quity Ti.r I cıpitıl + Addıtio.ıl Ti.r I ctPitıl)TİER lI CAPITALDcbı Insı.Ments and lhe Relaıed Is§uanc. Pr.miüms Defin.d by ü. BRSADcbı ıtısttuncnts aıd dle R.laıed lssu ce Pİğ[ıiMs Dcfincd by üc BRSA (covercd by T€mpoİafy

Proüsions (Amouıııs .xplain.d in ıh€ fi.st pangr.ph ofth. aniclc 8 oflİc R.gul.ıio, on aakciPit l)To.ıl lhdüctio.! fmD Ti.r n cıpitılIHücrioı3

'rom TiCİ II Cıpitıl

Dir..l and IndirEcı Inv.§tıl€nl§ ofü. Baİl o'l ils own Tic. lI c.piısl G)lıv.sfuenıs iıı Equity lın u!ıerııs l§su.d by Bark ..d FinaDcial lnstifuıions Invest.d in Banİ's Ti.rI| c.9itıl and tlıüng conditiorıs staı.d iı ü€ Anicı. 8 of ü. Rc8llarionToısl ofN.ı Lo.g Po§iıions ofüĞ Inv.sıncnls in Eqüity |ıems of Uncoosoli&ıed Banks ınd FinancialInstiıuıions wh€r. ıh€ Banİ ot+ııs l0% o, ıe§s ofüc lısu.d shiİ. caPilal Exceeding the l0%nüeshold ofaboı€ Ti.r l Capital G)T0(!l ot Nei Long Posiıions of üe lıv€stnenıs in Eqüry llems of Uncoffolidated Banks od FiİaıciajInniıüıio$ wtd. ü€ Ba!ık oMs l0% or morc of th. Issu€d shrr. c.piııl Eıcce.üıg üe l0o/.Thrcshold of.bove Tie. l capital G)Th€ Tolıl of Neı Long Position ofü. Direct or lndirtlt lnvcsİnml5 in Addilional Ticr I capit j aİdTier Il capital of UnconsoIidaıed Bank and Finaıciıl lnstiıuıions whc.. üğ Bek oms l0% oİ morcof üc lssued shde caDital Exeeding thc l0olo Threshold ofTj.r l capiı.l C)

il6E.J5,

].J3J3.335

EXPLANATIONS ON SHAREHOLDERS' EQUITY (Continued)

a

ar g 1G\

aa

o2,7

BAI{K MELLAT, MERKEZİ: TAHRAN-İRAN İSTANBUL TÜRJ<İYE MERKEZ,ANKARA VE iZMiR ŞIJBELERİ

3t ARALIK 2020 HESAP DöNEMiNE AİTFİNANSAL TABLoLARA irişrix AÇIKLAMA vE DİPNOTLAR(Tutaİ|aİ aksi beliniımedikçe Bin Tiiİk Lirasl ("TL") olarak ifade ediImiştiİ.)

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RJSK MANAGEMENToF THE BRANCH (Continueğ

Jl Dc.Db.İ 2020(1.207)

4EE.357

a

BANK MELLAT, MERKEZİ: TAHRAN_İRAN iSTANBUL TÜRKiYE MERKEZ,ANKARA VE iZMiR ŞUBELERi

3t ARALIK 2020 HESAP DÖNEMİNE AiTFiNANsAL TABLoLARA iıişxix AçIKLAMA vE DipNoTLAR(Tutalla! aksi belinilmedikçe Bin Türk Lirasl ("TL") olaİak ifade edilmiştir.)

l.

INFORMATIoN RELATED To FlNANclAL STRUCTURE Al\ıD RlsK MANAGEMENTOF THE BRANCH (Continued)

EXPLANATIONS ON SHAREHOLDERS' EQUITY (Continued)

Amounıs rcPre§€nl the morls of iıcns lo b. tak€ıı inıoAnicl.s of'R.gulatioı oİ ü€ Equity ofB.ıİs"

Jı December 2020

.pplicıtioıb.ro.. UlnOı4

{)To.ıl D.duction! from Ti.r Iı cıpitılTot l Ti.r Il cıpitılTo..l Equi§ (rorıl Ti..I İnd Ti.r lI cıpitıl)

To.ıl TiG. ı cıpitıl ı.d Ti.r lI cıpi!ıl ( Tol.ı Eqüiry)1-o!ns Graıl€n ıgaiİsl üe Articles 50 .nd 5 l of ü. Bankin8 Lsw G)Na Book Valuc§ ofMov.bl.§ and lmmotabl.s Erc..ding ü. Lifiil D.find in ü. Anicle 5?, clausel oflhc Beİing t".w d üç A5s.ı5 A.auiıld .8!inn ovcrduc R.c.ivablcs .rıd Hcld fo. salc butR.tlincd mor. üaİ Five Y.lrs c)od!ğ itcms to be D.fin d by üe sRsA Ç)It nt lo bc lHoct d fmn ü. sıın ofTi.r I .ıd Ti.İ Il c.piı.l (c.pit l) Du.iDg tt. T.ıBirio.

P.riodThc Po.tioo ofToı.l ofNct Loıg Positioü of ü. hvait[cır! i! Equity h€mi of UncoffolidaıenBanİs ,nd Fin İcial Instifutions wher€ th. Bank oııns l0p,,i or l.3s ofü. I§ü.d shır. cİpiralEİc.di,g üc ı0ol. Thİ6hold ofabovc Tiğ t cİPii,l ıoi d.duclcd fiom Ticİ l c.pitıl, AdditiooalTi., I Capiııl of Ticr I capita] ar Fr üc Tcmpor.ry Anicl. 2, clıus. l of ü. Rc8ı,lıtion G)Th. PonioD ofToid of Net Long Po§itioff ofüc lnttstncnıs in Equily lt.ms ofuncoDsolidatedBanİs ınd Finaıcial Instifutiotıs whc.! üc Baıl owıs mo.. üan l0% ofıhc Issü.d shaİe capilalEİc..diİg thc l0'l. Thİ.§hold of ıbov€ Tief I capibl not d.ducı.d ftom Aüitional Ti.r t capital orTicİ n capital a5 pc, ü€ Teınpoİıry Aniclc 2, clau§. ı ofü. R.8ulııion t)Th. Ponio[ ofN.l ı-o!g Position of rhe Inv.sftığntl in Equity Iıcds of Unconloliilaled Bank§ mdPinıncialIn§tihltionswheİeü.Baıİo*ıı§l0%ormor.ofüctssıı.dsharccapit,ofüeN.ıD€f€md Taİ Aışels afising f.om Temporary Direreıes aııd ofü. Monga8e servicing fuehl§ notdeducıed fiom Ti.r I capital as p.r th. Tğnporaİy Aniclc 2, clau§. 2. Parıgraph (l) ard (2) andTcİnporaly Ani§le 2, clau§e l ofü€ Reguladon ()

CAP|TALTotal capital ( Toı.l ofTier I caPit l and Tier Il capitrl )Tolal Risk wei8tılcd As§€t§

CAPITAL ADEQUACY RATIOScor. c.piıal Ad€quacy Ratio (%)

Ticr I caPila] Ad.{uacy Ratio (d/o)

cıpitıl Ad€qüa.y Ratio (%)

BUFFERSB.n}-sp€.ific toıal CETI cıpiısl Ratio(ı+brc)a) capilal con§€n€tioo BuJTcr Raıio (%)

b) B.nİ_§p.ci6c co{ııt r{ycliğl capibl Bufrğ Ratio (7o)

c) Additiooal cErl capiıal ov.r Toıal Risk wci8hı.d ^§s.B

R.ıio cdculatcd Acüordin8lo ıh.Anicl.1 ofcapibl co.§€Mtiotr d couıer{yclical capilil Butr fs R.sdıdonA6ount ı-or.r Th.n Erc.i... .! p.İ D.dü.ıioo Rul..Rğnıiniİg Tobl ofN€t Long Positioos ofü. lrycsfu.ııl! iı Equity htn! of Uncrn$lidat d BDü<s

and Financial lınitutions ştıcr. üc Brİ* oııns l0% or ı.§r ofü. I§su.n shaİE capiıalRcmainin8 Toı.l ofN.l t ı8 Positio.s ofüc Inv§ütcnts an Ti.r I capitaj ofunc.nsolidat.d Baİİsınd Finsncial Institütions ılh€r€ ü. Bank oı"ns mor. ıhaı loel. or |.§s ofü. Iısu.i shıİE capitalR.mainin8 Mongag. scryicia8 Ri8btlNğ Defen d Tax Als€t§ arising ftom T.mpofiry Dtr r.ııcesLiEi.! foİ Provilio.! U..d in Ti.r II Cıpiül C.lcühiiooG.ncral Loaİ Proü§ions for Exposures iıı sıandafd Appro.ch (b.for. linit ofone hundİed aDd tw€ntyfivc peİ lco üougd)G€.c6l Loa. Proü§ions for Exposures in siaıdard App.oach Limiıcd by l .25% of Risk weidted

Toıal Loan Provi§ion thıt Excceds Total Exp.ctcd Loss calculatcd Ac.ordirt lo communiquğ oncdculııion of Cr€dit Risk by Intemel Rııin8s Ba3çd ApproachTobl Lor Pİovisiotr that Eİc.cds To|ıl Exp€ct.J t s3 c.lculil.d AeordiDt to conmuniqua oncalculıtion of cr.jil Ri§k by Iıtemal Ratings Bas.d ApPİoach, Limıt.d by 0.6% fusk w.i8ht d

D.bt l.!ırun!!§ cov.r.d by T.Epo.ıİy Anic|. 4 (.rhcıiv. b.tİ... ı.1.20! & ı. 1.2022)Uppe. Lamiı fo. Addilioıat Ti€r I c.pii.l hcms subj..ı lo T.mponry Anic|.4

Amounı ofAdditional Ti€r I capiıat rıca§ subj.ci to TcİnporrJy Anicl. 4 üıl Eıc..ds Uppcr LimiıUpp.. Limit for Addition l Tig tl crPiı.j licms subje.t ıo Tcmporıry Anicl.4Arnounı ofAdditiooal Tief tl C9pita] Items sub.iccı ıo T€ınPoİiry Anicıc 4 lhal Exca.ds Upp.r LinitTotıl D.dıclioD! f.on Ti.r I cıpii.l

J,5J5491.692

83,688],6884.29

2,5

2,5

To1.1Ti.İ II

a

ı ı ı A\

ad

I

,

e)

28

provisioN in ac,cnrdanc. wiü Tğnporiry

491,892583.592

3-s3J

3.535

BANK MELLAT, MERKEZİ: TAHRAN_iRAN isTANBUL TÜRKiYE MERKEZ,ANKARA VE iZMiR ŞUBELERi

3l ARALIK 2020 HESAP DöNEMİNE AiTFİNANSAL TABLoLARA İı,işrİx AçIKLAMA VE, DiPNOTLAR(Tutalla. aksi bclinilmcdlkçe Bin Tqr!!]raş! ("!L]) !!-at ifadg edilqıiştir.)

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RİSK MANAGEMENT OFTHE BRANCH (Continued)

I. EXPLANATlONS ON SHAREHOLDERS' EQUlTY (Continued)

.pplicıtioıb.for.l/l20l4

()

258.0E6

34.7o7

223.3,19

{§8.9ıll

( l0])

(l92)

i'

ı}a

a

a

29

Jl D..dİb., 20ı9

200.000

855

colDmon f,quig Ti.r ı c.pit lPaid-in capibl ıo be Entitled for compensation afte, All cİeditoİ§share paemiums

ReseİvesGains ,efle.ıed to equity acc.,di.g to Tu.ki§h Accountin8 standards CIAS)Profitcuffent period profitpıior period pıofitBonus shares from Associate§, subsidiaries and Joint-venfures not Accounıed in cunentpeıiod's profit

comDon Equity Ti.r l cıpitıl B.for. D.du.aion.D.du.tioDi From coEmoı Equity Ti.İ l c.pia.lvalu.üon adjuslınents calcu|aıcd as pe. üe snicıe 9, (i) ofıhe R.8utaıion on BankcapitalCuncnt and Pİio, P€.iods' Loss€s not covercd by Rçs€rves, and Losses Acaounted underEquity accoİding io TAs G)Leasehold lrnprov€mcnt§ on oPerational ıJases c)coodwill Neü€d \dith D€fened Tsx Ligbilitiesother lntangible Assets Netted wiü Defened Taı Liabiıities Exc€pt Mortgate servicingRightsNct Dcferred T.ı Ass€VLiabiıity G)Differences aİisc when assels and liabilities not held aı fair value, aİe sübjected ıo cashflow hedge ıccountingToljıl çrcdit los§€s thaı excetd total expected loss calculated accofding to the R€gulalionon calculaıion ofcredit Risk by Intemal Ratings Based Approachs€curitizalion gainsUnrealized gains aııd losses fİom changes in bank's liabilities' fair values due to changesin cı€ditworthinessNct amouııt of defincd b€nafiı pıansDirect and lndirec1 lnve§tments ofüe Bark on it§ oı n Tier I capil,al t)shğes obtained against Aİticle 56, Paragİaph 4 of ıhe Bankin8 Law G)Totil of Net Long Positions ofthe Investınents in Equity liems ofunc.nsolidaled Banksnd Financial Institutions wher€ üe Bank owns l oplo oa less of üe lssued share CaPitalExc!€ding thc l opz Threshold of above Tieı I capital t)Total ofNet Long Positions oflhe Investınent in Equity lt€ms of Uneonsolidated Betk§and Financia] lnsİfutions İ*here th€ Bank O$n§ 1@/o or more of the l§sued share capitalEıc€eding lhe l0l" Thre§hold ofabove Tie. I CaPital t)Mo.tgage seNicing Righıs Exceeiing üe l0olo Thre§hold ofTiel l cspital G)Net Def€.red Tax Ass€ts aİising ftom Temporary Differcnc€s Eİceeding thel ff/oThreshold ofTicr I capital G)Amount Exc€eding üe 1 5olo Thİ€shold of Tier I cagitd as p€. ü€ Anicle 2, clause 2 oflhe Reguıation on Measutemenı and A§s€ssment ofcapital Adequacy Raıios of Banks G)The Poİtion of Neı Long Position ofüe Investrnen§ in Equity ltems ofunconsolids(edBank and Financial Instifutions wheİe ıh€ Baı* Own§ loyo or moİe ofüe lssued shar€capital not deducted from Tıer I capital G)Mon8age Servicing futh§ nol dcducted (-)Excess Amount aİising from Deferred Tax Assets fiom Tempoıaly Diffeıences G)

(l92)(9l6)

.,r:li

BANK MELLAT, MERKEZi: TAHRAN-İRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMİR ŞUBELERİ

31 ARALIK 2020 HESAP DÖNEMiNE AiTFiNANsAL TABLoLARA iı.işxix AçIKLAMA vE DipNoTLAR(-I'utarıar aksi bclinilıncdikçc Bin Türk Lirası ("TI-") olarak ifadc cdilmiştir,)

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OFTHE BRANCH (Continued)

EXPLANATlONS ON SHAREHOLDERS' EQUlTY (Continued)l.

b.forc l/ın0l4

Totı| IHlciion. freD coD6o! Equity Ti.r t cıpitılToül cod|no. Eqliry Ti.r I ctPittlADDITIONAL TIER İ CAPITALPreferrEd stock noı Included in common Equity Tiğ I capital aıd ıh€ R.laıed shaİe Pr€rniumsD€bı In§ı!Mc,$ 6nd üc Rcıaı.d Issua.ca Pilmiuns Dcfio.i by üe BRSADebı llstün.ıls and ıh. Rclaıed Iisuanc€ Pr.miürns D.tin€d by ü€ BRSA (coveren by T€mponryAıticl. a)Adltiıio.ıl Tİ.r ı cıPi.ıl b.ror.IHuclioD!D.dlcrioü fİo AddiiioDtl Ti.r I c.pit lDiİ..l ınd lndiİ.ct lİve$ncnts ofdıc Ba!İ oa ils ovrn A.lditional Ti€r l capltaj ()Inv.ın.nts in Equiıy hllİıbots I§$.d by B§nİs of Financial |Dstitliioc hv6ted iı B.nİ'§Addiiion l Ti.r ı c.pii.| lod Hıürıg coıditioo5 slaıd in üc Aniclc 7 ofüc RcgulatioDToıd of Ncı too8 Positioüt§ ofü.Inı€stm.nis in Equily lt.m§ of Unconlolidatd Baİ*s and Fin.nciıllınihton§ lft.r. ü. Bank oms topl" or less ofıh. Issu€n shaİ. c5pital Excceding üe l0./.Ttİeshold of abov. Tiğr I capilal t)Th. Tola] of Nğ Long Position of üc Diİecı oİ Indir€cl lnv.st n.nts in Addilional Ti€r I cıpitıl ofUnc.nsolidat i Banİ! aİd Financial lnstiıutioıs wher. üc Bııık owns mor. ıtan l0% ofü€ Issu€dshar€ capiı.l G)othğ ilc65 io bc dcfincd by ü€ BRSA Ç)ltGE! to h. tHücı.d fmn Ti.r I cıpiü! dünng th. Trıİ.i.ioo P.İiodcoodülı snd oİcr lılangible Ass€ls a.d R€laıci D.f.rr.d Taxcs ,ıoı d.iucted fioE Tier l c.pilıl ısp.r ü. T€mporary Anicle 2, clau§t l ofth. R.8ülırion on M.asur.m.nt and Alscssm€nl ofcapiblAdequacy Rrıio5 of Br.ks G)Nct D.feE d T.İ Ass./Liability noı d€ducled ftob Ti.r I crPilrl 5s Pcİ ü. T.opofiry Aİticl. 2,claus. l of lh. R.gülaıioıı on M.arurEm.ıı a! A§!.s§m.ıı of capiıel Ad.queğy Ratios of Beİs G)Dcductio ftom Addiıiorıal Tiğr I capiı,l whd ü.rc i5 nol 6ough Tiğ lı crpital G)Totıl D.dücıio.. fmE Additioo.| Ti.r l CıpirılTotıl Addiıio..l Ti.r t cıpiııtToııl Ti.r I cıPit{ (ri.r ı cıPittl=conDod Eqlity Ti.r ı cıpiül + AdditioİılTi.r I Cıpitıl)TIER II CAPITALt)€bl hsEıım€ıls and ıh€ Relaled Issuanc! Premiums D€fined by ü€ BRSAD.b. Instİuments a!ıd ıh. Relal€d Is$ance Pfemiums D.fined by ü. BRSA (cove.ed by TeDporary

Provi§ioD§ (Alnor§ explaincd in üe ftr§ı p@gİaph oflh. aniclc 8 ofü. R€gulation oı BaİkCgpilal)Totıl İHuctioıt fro|ı Ti.r lI c.pia.lIHuc.ioİ! fmn Ti.İ tı c.PirtlDir.cı aİd |ndir€ü hvğstDsl5 ofth. Bad( oo iıs own Tiğ ll capiıal G)]nv6t ncnts in Eqüity ınsıİun.nis lisu€d by Bıİ*§ and Financiıl ln§tifutioııs Invastd i,l Bat İ's Ti.,I crptd a.d ııaving cooditioıs sı4ed i. üe Aİticlc 8 ofü. RcgülıtionToğl ofNeı Long Posiliott! ofü.Iıv.shcnls in Equity |ıcms of Unconsolidrted Baııls ı.d FioaıciılIlstiluıioİs wh.r. üc Banİ oçııs l0'lo o, lcii ofü. lilucd shrr! capibl Exc€eding üc |trl.T}re§hold ofabov. Ti.r I capitaj G)Total ofNd Lon8 Posiıions ofüe Inv.stn€ı!ıs in Equity llems ofUncoıısolidated Banİs d FinaıcialInstifutions whcrc ü. 8ank oms l0'lo or nore of th. I§§u.d shaİ. capiıal Exc!€ding tn€ l 0%Thf.shold ofabove Ticr I Capiıal G)The Tolal of N.ı Long Posil;on ofüe Dircct or tndh.ct |nv€sbn.nts in Additiooa] Tier l Capiial aıtdTier II Capitı| of Unconsolidaıed Baıks ad Finaıcial Instilution§ wh.re ü. Baİ* oıı1ıs l0% or moreofü. Is§u.d shar. Cıpital Exc.eding ıhe l0'l. Tfu.§hold of ri.r ı caPit5l t)Olhğ it m5 lo b. dcfincd by üc BRSA G)Toiıl D.ductioot from Ti.r Ir cıpitılTotıl Ti.r ll cıPia.l

'l D.c.6b.İ 20ı9

(ı.2ıı)457.7ü

l57.7J0

2 7692.169

oııl Tier ı .nd Tie. ıI cız.769

460.499

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3l ARALIK 2020 HESAP DÖNEMiNE AiTFİNANsAL TABLoLARA iıişrix açıxLAMA vE DipNoTLAR(Tutaılaı aksi beliıtilmedikçe Bin Türk Lirası ("TL") olaİak ifade edilmişti..)

|NFORMATION RELATED TO FINANCIAL STRUCTURE AND RİSK MANAGEMENT OFTHE BRANcH (continüed)

L EXPLANATloNS oN sHAREHoLDERs' EQUlTY (conıinued)

b.foİC l/l,40l4]l Dtceıiıbeİ 20l9

lt.ms io b. Ded!.ı.d froD the sum ofTi.r l ..d Ti.r II C.pii.l (C.pitıl) Dunng lh. Tİ..!itıonP.]iodTbe Po.ıion ofTolrl ofN€l t ng Po3iıion3 of ü. Iıve§tncr,ls in E{uity lıcos of Uncon5olidrcdBaık and Finıncial In§ifutiotrs wtığ. ıhe BaDİ oıfos l 0% of l.ss of ü. I§sucd shaİc cıpiıalExc.eding lh. l 0% Thr.shold of abov. Ti.r I capitd ıoı d.nucıed from Tig I c5piı5], AddidonalTi.r I capiı.l or 1i.İ u ca9ital as p€f ü. T.mpo.a y Anic|.2, clau§e l ofüc Rc8ul.ıion ()The Ponion ofTotal ofNeü Long Posalions oflİe Inveslİn.nl§ iİt Equity n.ms of Unc.nsolidat.dBrık and Finaİıciıl In§ilutions wh.rc ü. Bank Own§ mor. than l0% oflh. Iısued Shaİe capiıa]Exc.eding üc l0% TblEshoıd of abovc Ticr l capital noı dcduclcd froD Addiıional Ti.r I capitd cTier I clPiiıl a§ pĞr the T.DDolaİy Anicl. 2, clıus. l ofth. R.8ülıİon c)Th. Poftioo of Ncl tong Position of üc lıvcst !ıents in Equity llcms ofutıcotısoıiüı.d B..ı5 a,dFinatıciıl Institutions wh.İ. ü. BanI owns l0pl. or moİe of ü. I§su€d shar. C.pibl, ofüc Nclf|.ferrei Tıx A5scı! aİisi[8 from T.ınpor.fy Ditrcİ.ocas .nd oflh. Mongage scrvicin8 Rigbt§ ıo1d.ducl.d f.om Ti€r I capilal a§ pcİ üc T.mpofary Anicle 2, clau§€ 2, Para8raph (l) ınd (2) andTemporary Anicl. 2, clau§a l of üe R.gllation G)CAPITALTotal capibl( Tolal of Tier I Capita| ınd Ti€, tI capiı' )Totil Risl wcighıed A§*t§CAPITAL ADEQUACY RATIOScorc capiıal Ad.quacy Ratio (%)

Ti.r I capiııl Adcquacy Raıio ('n)ciPit§l Adequacy Ralio (%)

BUFFERS

460-499506 E0]

90,32903290,86

Brrİ-spe.ific total cET l capiıa] Ratiocapila] cons.rvatıo. Buffer Ratio (%)

Banı-sp€cafic coııııe.€yclicj] cr9id Butrğ R.tio ('/.)

Addiliooel cETl crPital ov.t Toğj Risk wddt.d Ai§.ls Ritio c.lculaıed Acco.ditı8lo th. Anicl.4 ofcapibl co.s€Nıiioı and counlğ€yclicrl capitıl Birfr.rs R.gulılioDAbou.§ ırv.r Thın Elcd§d .. p.r lHüclion Rül..Remıining Toıal of N€l ı,ong Position§ ofthc ]nv.st il€nıs in Equity It€ms ofuncoısolidaı.d Bank!

Fiııncial Innifudooj whc.E üc aaİİ owns lop/. r lcs! of üc l§su.d sharB capiıaıR.n.ining Toırl of N.t ldt P6itions oflh. Investnğııs in Ti., I caPilal of Unc,trloli.lal.d aa!İs

Finaıcial In§titütions *lı€r€ ü. Baıık oııns mo.E üan l0./o or l.ss ofüe Is§ued sh.r. capiirjRğnainiry Mong.gc s.rvicing Ri8htsNct D€f.rİ.d Tax Ass€t§ aİising ftom T€mpon y Diff.renccsLinit!

'oİ Provirio., U!.d iı Tİ.. ıl cıpitıl cılculttion

GçDef.l ı-oa,ı Pİovisioİs for Exposüİ.! iı standard Approıch (b.for. liniı of ott. hundİ.d ınd tıı.ntylive

c€ncnt tnan Pmüsioos for Eİposür.s in sıanda.d Approach Lirnüled by l .2J'l. of Risk w€ighled

Total t-oe Pİovision üal Exc..ds Tolal E,Qe..cd L.s§ calculaıcd A.cording lo commuDiquĞ oıCalcülation of crcdit Risİ by Inl.mal Raıings Bas.d ApproachTotal Loa! Pİovisioİ üıt Exc€€ds Toıal Exp.ct€d L.ss calculaıcd Accordin8 to commüiquĞ onca]culaıion of cr€diı Risİ by ltılcmal Rit]ngs Based Approsch, Limit d by 0,6yo Risk wcight.d

D.bı l.!rruE.Dt! cov...d by T.npor.ry Ankl. 4 (.ftctir. b.ti..n 1.1.20l&ı.ı.2022)UPpeİ Liİniı fo, Additioral Ti.r l cJpiı.l k.ns sıbjc.l to Tğnporİry Anicle 4

futrounl of Additiooaı Tier l capit l hğns subjc.1 ıo T.mpor.ry Anicl. .t th, Exe.n§ Upper Lini|UPp.İ Limn for Addilional Tieİ ıI capita] Il€ms subjet 10 T.mPoEİy Anicl. ıl

2,52,5

2.169

2_769

Arnou.t of Addıional Ti€r ll Limn

Amounls r€pres.nı üe aıİ)ounıs of iiems to be l.İen inlo coısidention and subjccı lo lİansitioİ proüsioıs in acco.dıİcJ üü T.mporaryAnicles of "Re8üla.ion on ü. Equity ofBank",

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BANK MELLAT, MERKEZi: TAHRAN_iRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMiR ŞUBELERi

31 ARALIK 2020 HESAP DÖNEMİNE AiTFiNANsAL TABLoLARA iıişrix AçIKLAMA vE DipNoTLAR(l'utaİlar a_lisi belinilmedikçe Bin Türk Lirası ("TL") oIafak ifade cdilmiştir.)

ı.

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENToF THE BRANCH (contiDued)

EXPLANATIoNS oN SHAREHoLDERS' EQulTY(continued)

b. Items includ€d in capital c8lcuıation

None.

c. Reconciliation ofcapital items to b8lance shoet

ıö a

Subordinaıed D.bBDeductio.,s ftob Tieİ l capital C)rı.ı I cornıolsubordinaı€i D.bıs

Dductiof§ frob Ti.r Ir capilal C)TEı n cr?aolD.ductions from Tot l capital G)

dilI.|.ıc.s

] 535

3.a}5

n r."ri

Ptid-in cipiıılCİpital R.s.rv.sohcr co6!t h.nsiw hco6c Accoİdid8 to TAss.cüİitics V.luc tncr!ır. FuodRcvduıtioo surplu! oo Taİgiblc A§çı!Rgvılurıioo sutplu, on ht ryibl€ AıldsR.vdu.ıim surplu! m lıvesfueıl ProF.tyH.dging Punds (Etrcctjv. PonioD)Ac.umülat.d ı..luatioo difr.ı.octs &om aşsas hcıd forsal. and fiom dis.ontiıu.d op.ratioNolhğ cepiıal Rcs.İvc§Boıü! shır.s tom lıvcsEl.rll! fu A5soçiaıcs,subgüın.s ınd Joinı vcnlutls (Busincat PanD.B)

Pİofiı R.s€rvesprofil ot ırs§Prior P.riods Pfofi lq,osscuİr.nt Period Nel Profiylo§§

Mino.ity sha..sD.dtctions İ,om common Eqüty Tiğ I cıpital c)connon Eoüitv Ti.r I CıDitıl

200.000

Ar9ırı ol Yolı. olıh. .aplı.ı.orf.dio, nprl

_ 2m.000dill.r.rc.s

5:l 5,ı

9l62E8.59425E.025]0.569

9l62tt.59,ı258.o2530.569

(!,207)4tE.357

(1.207)468.]57

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BANK MELLAT, MERJ(EZI: TAHRAN-iRAN iSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMiR ŞUBELERi

3t ARALIK 2020 HESAP DÖNEMİNE AİTFiNANSAL TABLoLARA iı-İşxiıı AÇIKLAMA VE DiPNOTLAR(Tutafıar aksi bclirtilmedikçc Bin Türk Lirasl ("TL") olarak ifadc ediImişli..)

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OFTHE BRANCH (Continued)

- c Reconciliation of capital items to baiance sheet (continued)

^noııaıof yolı.c olıhe eapüaı

dx...ac.s

sııboıdin ted DcbısMucrioo! from Ticr l capiıal G)1uı I cıriıolsubofdinaı.d Dchs

Dcduaions ftom Ticı ll Capital G)no II ca?tüolkuctioıs ton Toı.l capital G)Toıal

2 769

2.769

,eo.,r,

d. Approaches ıpplied to ıss€ss th€ ad€quacy of internal cıpit8ı requirement in terms ofcurr€nt ınd future activiti€s

The Branch prepares 'lntemal Capital Assessn,ıent Plocess' document on the basis of 'RiskManagement Policies and Implementation Procedures' approved by the Board of Managers on 27Novernber 20l2 and updated on 27 April 20l8. It has been aimed to determine üe needed capital sizein the period of next one year by evaluating and calculating effectiv€ly all risks that Branch will bemet due to this document. Branch prepared taking into account the lat€st information 2018 *2019,

2020,202l lnternal capital Requirernent Analysis" 28 March 20l9, No. 7 was accepted by the Boardof Managers. Branch prepared taking into acçount the latest information 2019 *2020,202|,2022

Inıernal Capital Requirement Analysis" 18 March 2020, No. 7 was accepted by the Board ofManagers.

In the Analysis of Intemal Capital Requirement, the Branch's activities and services, the main andsub-risk elements that may be exposed to them and the current legal capital requirement are analyzedbased on the recent developments over the financial data of the previous yeaİ and the forecasts andanticipations calculated for the next three years of opeİation within the scope of üe scenariosubmitted by BRSA. Besid€s ofthese matters, üe main and sub-types ofrisk that has been consideıedfor Branch, and the quantification of these risks aıe included in the calculation of intemal capitalrequirements for these risks has been placed. ln üe Capital Requirement for 20l8and 2019 credit risk (in general. country), m interest rate) and operational riskin addition to banking accounts that cannotbeen considered.

Paid-in capiıdC:pibl R€scrv.soiher compf€h.nsiv€ ın..iİ€ A.cordin8 lo TAss..üritics Valü. lncr.is. FutrdR.raluation sı.ırplu§ on Tangibl. As§.tsR.vıluation surplus on Intangiblc AssclsRcvaluarion surplu! on InvcstDcnı Prop.rtyHdging Fuds (EfTc.tive Po.lioD)Ac.ıuDulıi.d v.luaıjoı di6crEn Js torıı er§.l5 h€ldfor ssl. ud fiodt dis..iainud oPc.aıioıl5olh.İ capitai Res.fv6Bonus shares aodı lnv.slüneDl§ in Associaıes.

sh!rc premiütn

hofiı ü Lossftiof Pdiods Rofirto§scürEı P€İiod N.r Prcfit/Los

Minonty sbaİcsDaductions ftoın common Equity Ti.r I capilrl c)

(l03) ( !03)

ı57 ?J0

diİeftnces

subsidieies Dd Joinl v€ntures

(l l08)

20o 000200,000

855258 086z23 319

34-101

(l.]08)4s7.730

8J5258,0E6223-37934.101

ı

ııı(\

th§rt

o

3

risk with reputational risk has

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BANK MELLAT, MERI(EZİ: TAHRAN-İRAN iSTANBUL TÜRKiYE MERKEZ,ANKARA VE izııin şunrı-nni

3ı ARALIK 2020 HEsAp nöxnıvrixp airFiNANsAL TABLoLARA iı,işxix AçIKLAMA vB »ipxorı-e.R(Tutaİlaİ aksi belirtilmedikçe Bin Türk Lirası ("TL") olaIak iiade edilmi ştiİ.)

INFORMATION RELATED TO FINANCIAL STRUCTUREMANAGEMENT OF THE BRANCH (Continued)

AND RISK

lI. EXPLANATIONS oN cREDlT RısK

a. The Branch tries to reduce credit risk by classifying the credibility with high banks and financialinstitutions. The BIanch requües additional guarantees from the real persons and entilies üat theBranch extends loans to who were assessed as high risk after performing detailed risk ratings onindividual loans. Due to the imposed sanctions, the credit transactions of üe Branch decreasedafter 2014, Following that some lran-based financial and industrial insıifutions, including BankMellat, the main shaıeholder of the branch, were included in the list of secondary sanctions onl7 october 20l8, the decrease in the credit transactions ofthe Branch has continued.

The credit worthiness of borroweıs is monitored regularly. Audited information is obtained forthe n€w rendered loans if possible. Unaudited information is examined in detail by loandeparğrıent of the Branch.

b. At 3I December 2020, tlıe Branch has no forward and option contracts or any other similaragreements.

At 3 | D€cember 2020, tJj,e Branch has been faced with an insignificanı amount of credit riskexposure.

d. The Branch subjects the non-cash loans which aıe reimbuısed, to the same risk weight as theloans which are passed due but nol collected. Rescheduled or re§trucfured loans are monitored bythe Branch according to the risk management and monitoring principles of the Branch. Thefinancial conditions and commercial operalions of üe related customers are continuouslyanalysed where interest and capital payments according to new payment plans are closelymonitored.

The Branch's transactions in foreign countries with İegaİd to banking operations and creditfacilities are mainly held with corporations based in Islamic Republic of lran, where üe headoffice ofthe Branch is also based.

f. The Branch is not active in intemational banking market

g. l. The proponion ofüe largest l00 cash loan balances in the ıotal cash loan portfolio ofüeBranch is l00%(3l December 20l9: l007o).

The proportion of the largest l00 non-cash loan balances in the total non-cash loanportfolio ofthe Branch is l00%(3l December 20l9: l00%).

The proportion of the cash and non-cash loan balances in the total assets and non-cashloans is l2,03% (3l December 20l9,.'1,28 o/o).

h The general loan loss provision amount provid€d for credit risk is TL 6.625 (3 t December 20ı9:TL 5.43l).

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BANK MELLAT, MERKEZİ: TAHRAN_iRAN İSTA}ıBUL TÜRKİYE MERKEZ,ANKARA vE iZMiR ŞUBELERi

3l ARALIK 2020 HESAP DÖNEMİNE AİTFiNANSAL TABLOLARA iıİŞxix AÇlKLAMA VE DİPNoTLAR('rukrlaİ aksi belinilmedikçc l]in'I'ilrk Lirası ("TL") olalak ifade edilmiştir.)

INFORMATİON RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENTOF THE BRANCH (Continued)

Il ExPLANATIoNs oN cREDIT RIsK (continued)

()(")

Includes total risk afiıounıs before the effect ofcredit İisk mitigation but aftea credit conversıons,Average nsk aınounts arc üe ariümetical aveİage of ü€ amounts in monthly repons pr€paİed acü.rding to 'üeRegulation on Measuİ€ment a.d Assessm€nt of Capital Adequacy Raüos ofBanks.

lncludes !ota] risk amounı§ b€fore üe effect ofcredit.isk mitigation but afier credit conversions.Average İisk arnounls aİe the arithm€tical averagc of üe amoun§ in monthl y repo(s pİepared according to "lhe

lposur. cıt.gori.s (current Yeır)

currant pariodRitİ Amount

e)l93.159

cürrant pariodAv.rıg. RiskAmount (r*)

l87.75 |itional and unconditional receivabl€s ffom c€ntral 8ovemments or centIa] banksitional and unconditional receivables aom regional or local govemments

itional and unconditional receivables from administrative units and non-commercial

itional and unc.nditional rec€ivables tom mültiıalenl developmeııt banksitional and 0conditional receivables ftom intemaıionaj organizalionsitional and unc.ndiİonal İecaiYables f.om banl6 and b.okerage houses

iüonal and uncondiİonal .eceivables from coaporaıesiıional and unconditional r€tait rec€ivabl€sitionsl and unconditional rcceivables securEd by mon8agcs

445.926lu,22E

1-700

due receivabıe5 3.16lItem§ in r€tulatory high-risk cstegoriesExPosuİes in the form of bonds securcd by mortgages

securitization positions

shorİ-term İeceivables fiom baİk§, brokeıage hous€s arıd corporatesin thc l]orm of§ollective investnent ırndcrtakings

afcs 369460.t0l

1.24r.x4

385345,45l

l,wl,769ilems

olel

Erporur. cıtagoİiar (Pr.vious Ycır)conditional and unconditional receivables from ccntİal govemments o, crnüal bankconditional and uncDndiüonol rec€ivables tom ıagional oİ local governm€nts

conditional and unconditional receivables fiom administrative ııni§ and non-commelciajenteİpri§es

conditional 8nd uncondiİonal İeceivabl.s ftom multilale.al development banks

conditional and unconditional rcf,.ivables fiom inıcmaıional organizaıions

condiıional and urconditional r€ceivables from bankl ğıd baoke,age hous€§

conditional and uncondiıional rcc€ivables from coİpoİaıes

condiİonal and unc.nditional.etail r€c€ivabl.sconditional and ünconditional rec€ivables secured by mortg€esp8st due receivablesltems in regulaıory high-İisk categoİies

Exposures in the foİm ofbonds secured by mortgages

securitizaıion position§

shon-term recrivables fİom banks, brokcrage houses and corpoİatesExposures in th€ fo.m of coI leclive inv.stm.nt underıakin8ssharesotheı iıemsToııl

curr.ol Pe.iodRisk Amount

c)l86.573

cürr.nt PĞriodAvtrıge Ri§kAmo$nt (**)

2,70.136

456.703

69.138665

457.t5327.4l4

1-080

8 949 9.02l

|.23,|

3l7.553ı.042Jıt

|.237254.693

ı.022.of,J

ı

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a.aO

(.)(*.)

Regulation on M€asurement aıüd Assessnent of capital ofBanks

462,523

95.1621.571

4.]l0

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BANK MELLAT, MERI(EZİ: TAHRAN-iRAN iSTANBUL TÜRrdYE MERKEZ,ANKARA VE İZMİR ŞUBELERi

3ı ARALIK 2020 HESAP DÖNEMİNE AİTFiNANSAL TABLOLARA İı,iŞrİx AÇIKLAMA VE DİPNOTLAR(Tutarlaı aksi bclirtiImedikçe Bin Türk t,irası ("1't,") olarak ifadc edilmişlir.)

(

l l.

INFORMATIoN RELATED To FINANC|AL STRUCTURE AND RISK MANAGEMENT oF THE BRANCH (Continued)

EXPLANATIoNS oN CREDIT RlsK (Continued)

i. Profile ofsignificant €xposures in major regions:

EıPotu.. c.tc8o.ie (i)

condirion.IcoIdiıionıl.ld .nd

!n.o.diıio.ıl !..ondilion.E..iv.bl6 a.on ı ft.ivıüld

...ıdl aren rc8ion.lıd.mn.ıil o. o.|G.l

.dırıl bı.ı! lol.nE.nl,

l G.i9ıblğ İurdu.Eı..d t, ca,.bl..onıı$r BRsA

Cü.r.ı! P..iodl. Domcdic2. Eu.op.rn Uniorı(EU)3. oEcDcoun|İics(")4 ofr-shorcBınking R.gioiü§

5. UsA. canld!6 olİğ Co{İt ics

subsidiaıics and

8. Unr]loc.ü.dAss.t§4-iıbiliti.s

397.627

46.74l

6t

70 50.11l 3.I6l 46| l87 l.ıO5Jı5

46-14l

6t

l4m 93.55l 95.0{l

t9J.l59 {{5.926 9.3.621 50.1l l J.l6l 46ı.l87 1.217.165

(.) Ihe nsk classes in ıhe Regıılalioıı oıı Measurenıenl and Evalualiıİı ofC.piıal ^dcq{acy

ofBa (s shall be talen inıo consideratioD(") lnclude§ oEcD countne§ oth€r tha! EU counfi.s, UsA od cb.da(...) lnchdcs as$l rd liability il€ms üat can noı b. a]located on aconsisıcnl basis

al1V c

'f , a1'36

I

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((BANK MELLAT, MERKEZİ: TAHRAN-İRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMİR ŞUBELERi

31 ARALIK 2020 HESAP DÖNEMiNE AiTFiNANsAL TABLoLARA iıişxix AçIKLAMA vE DipNoTLAR(Tutalla. aksi bclirtilmedikçc l}in-l'ürk Lirası ("1'l,") olarak iladc cdilmiştir.)

ıl.

lNFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THE BRANCH (Continued)

EXPLANATIoNs oN cREDlT RlSK (continued)

i. Profile ofsignificant €xposure§ in major regions: (Continued)

alı?}c

a

aıpo§u.c Cıteton6 (')

39t.666

56.88l

50

73l

d.nn.d in sdurilid

c.l.gory by adny

'r D<.ü6..ı0ı9("")

P.nod P..iod

2. Europ.an Union(EU)3. oECD counıİi.se,)4. otr-shorc BınkingR.8ion§5, Us.\ ceİda

l88 57] 665 8,949 ] l8.790 9l6J74

- 56.t8t

_50

69.5lJ

subsidiaİi€s and Joinl

8. Uıa]|o.atcdAss.tvliabilili.s ("')

1.106 68.407

l88.57J ,ı56.70J 69.138 665 t.9]9 Jlt.790 1.0{2.8I

c) Th. nsk clas*s in üğ Re8ulaııon on Mea§üeınent ad [val uaıio. of cadıal dcqtra§, of Banls shall bc ıalclt iıİo cotr§idğmıion(") Includ.s OECD c.untri.s oücr üın EU çounties, UsA 5nd crnad!("') lnclud$ .sçt ,nd İiability iı.ms üaı can noı bc alloo!ıcd on a consist€nı basis,("'' Pr€üous p.riod is r..dju!ü.d.

3,1 t, ıı}I

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((BANK MELLAT, MERI(EZi: TAHRAN-iRAN İSTANBUL TÜRKiYE MERJ<EZ,ANKARA VE İZMİR ŞUBELERİ

3l ARALIK 2020 HESAP DöNEMİNE AİTFİNANsAL TABLoLARA iıişxix AçIKLAMA vn »ipxorı-ıı(Tutarlaı aksi bcli.tilmedikçe l}in'I'ürk Lirası ("TL") olarak ifade cdilmişti..)

lı.

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THE BRANCH (Continued)

ExPLANATloNs oN CREDlT RlsK (continued)

j. Risk proİil€ by sectors or counterparties:

,i

EtPosu.. (;ıt.go.id (r)

co.dilio..ld

coıliİo..ı .ıoai|b..d ..l std+E l.16ı[email protected]ıİ..r Gn.!b co.ün6..l ıĞndğ Eiv.İd .n!civ.!ad l6n ..d c.ıdnii.l oi adi*n i. s..Uiıin alu ü..l* jjlİ loare. tüı. ö..ı, .ıl..o.difü. [...din.J ıiı| .iı .oll.İr.aı- h..ı.f.a. ..ü..dr.rd h.oı.rıı. b..ı.r.a..l ..t il ffiiv.üğ Ğ.İ.d P.' d* ..rıory üy d ty s..ıriın.ri loG ..d iırrrc. oltdı.._ İolg d.iv.blğ t, Drır.t. reivü|ğ aR§^ Drt.ığ O raiıi.u cD.r.r. ı h..h reiv.blğ TL

l1r.16,

lar.ü,

9],aıı lt.a56 5ıı

532

l9,aJ! ,J.52ı lı2.

9r.572

ar-9r,

7loa

93 522,.ala7,alı

alı,5ıı

] 204

69 3 235 a28,

a90 205

,1,15.9ı6 '3.62ı

a61.1ı7

ry

38

ğ

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(BANK MELLAT, MERKEZİ: TAHRAN-iRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMiR ŞUBELERi

3ı ARALIK 2020 HESAP DÖNEMİNE AİTFİNANSAL TABLoLARA İıİŞrix AÇIKLAMA vn nİpxorıı.n(Tutarlar aki belirtilmedikçe Bin Tü.k Li.ası ("TL") olarak ifade cdilmiştir.)

(

INFORMATION RELATED TO F|NANCIAL STRUCTURE AND RISK MANAGEMENT OF THE BRANCH (Continued)

EXPLANATIONS ON CREDlT RlSK (Conıinued)

Etpo.üre Cı..8ori6 (')co.dilioı.ı

ııduı.o.dilioı.

aoldnio.j c.ıdi.i...l l E.ivıbl6..d .!d lron

ın..idnio..| ...o.dilioı..dninn.r.iavft.ivıb|d l E.iv.u6 .!.iit.ıd

fron ...lİ.l a.oh aid.li. ıirı scınıi.

üİ ..l|ı!r.li

'.' dt ..ta.ıı ı.d b, scğnıiı.lio.

'8iv.6lğ 6y ERs^ norrııtğ p.*liou

ıoa,o:^a,iğ,lrFnq -d §.aıt ldina

Şd,,F!üğy

lüİıfuüaMh[doü.na

el@İğ, o- j ı,ccd6ir

§ğviğlvül_ı. d tdd

'İıı^§!ıd.iO

d DültTEş..d]üd ftle

nd ae .d tdı l*]ğıttr'..ıl §ğri€Eöıffils6nğ

xdü !n §.d.l s6d6

l03

6116ı]

a6, ]8221o

,0ı l211

lco]l4l9

lr1.57J

95

6a 417 ]l? 512 l22.5E8 4lı ]5795

5J3,9,1s

ı,Oaı,,t,

l l.

aaIHı

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BANK MELLAT, MERKEZi: TAHRAN-İRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMİR ŞUBELERi

31 ARALIK 2020 TARiHi İrİnA,nryı,ı KoNsoLiDE OLMAYANFiNANsAL TABLoLARA iıişxix AçIKLAMA vB nipxoııan(Tutarlar aksi belirti lmedikçe Bin Türk Lirası ("Tı,") ola.ak ifade edilmiştir.)

l!

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANcH (continu€d)

EXPLANATIoNS oN cREDlT RlsK (continued)

k. Distribuıion of risk bearing ınaturities according to the remaining msturities

(.)c.)

Ilcludar risl anourıs bcfor. ü. .trcct ofc.€dit,isl miti8ııioo bul aiğ üc cr.diı convcnions.Cr.diı risk amoüni§ which havc no maıüİili.§ do noı compris. in ü. rıbl.

lncludes risk anounts b€fo.e lh€ eflect ofcledil risk mitigatioD

3l D...Eb.r 2020E!po!!r. clı.lifcırioD. (i) (r')conditi6,1 ad ucrıditioıal r.c.ivabı.s fromccnF.l gov.mm.nıs or c€nıı.l bankscondition5l ad u@nd]tioDal rec.ivablcs fromrcgional or local govemın.nt§co.diiional md unondidonel r@ivrbl.§ fiomaöninist-aıivc rits ed no.-.!mmc.cirl

condiiioül aıd uıcrndiıioıal r€.livabl.§ fromİnultilarcİal dev.lopn.nı bı.İscondiıional aıd uDconditjoılal r€.livablc! fiomint mation.l of8aniation§condiıiona] aıd uİc.nditioııal r€..ivıbl.§ ftomba*s and hİokcrige houscscodditiooal a.d unc..ditio.al .€crivablcs from

co.dition l dd uca.ditoDal r.tail .ec.ivablcsconditjoorl aİıd unc.nditio.rl r...ivablcs§ur.d by nont!86Pa$ dırc r.c.ivabl.sR.t it bl.§ d.find in hign risİ calcgo.y byBRsAs.curiti€s collal.rrized by hon8ag.ss€cuf iİzııaon positionsshonn.m reeivable§ ftom baıls. brok r.g.hous.§ §nd corporiıc§Inv.stınenG simila, ıo coll.clive inv.sunenl

o'hef...€ivabl.sToTAL

l6MIh l3nrıhs

68 416

4

7-761

17

l0 94J

ı.0l7

l2,1.913

2l8

6E tü0 2.E09 l1.962 lza.l9l

Jr D...nb..20ı9İtpolrrc cl.ılifcıtio.! (') (r')co.ütiona] eıd u.c..ütioıa] r€c.ivabl.s from cenFalgovenıncnıs o. c.nğrl bankcondiıiona] a.d unc.nditioıal r.clivabıcs from re8ional or

condiıionıl and üconühonal ..cJivables fromadmiıi$ariv. rils rd.on-colmğrçial eni.rPri§.§conditioıal and rcanditiooal İ.eivabl.s ftoh nuhild€ra]

condnion.l ınd uconditional r...ivıbIcs frcmintcmational of ga.iraıiorlscondition l ğnd uconditional rcccivablcs from banks arld

coıditioıal and uİcoıditioıa] rec.iv.ble§ flom corponı.scondniona] 6nd uncoıditional reıail r.rcivabl.scoıditiona] and uncondltional recJivablğs §ecurcd bymon8agesPdı du. receivabl.sR.eivablcs d.fined in high nsk caı.8ory by BRSAs.curilies collaı.raliu d by hon8a8.ss.curitizalion posilionsShon_ıerm re.€ivablcs from ba,t§, brokcrage hous.s and

lnv.sın.nls sımilar ıo coll.ctiv. invcstmenl funds

ToTAL

l nrıh l 3 nrıhs 3 6 norıs (| 12 Donıhs oye. l wal

27 6E,7J9

21

tEE

6E.3J73E2

]5l23

1.55

233

ıc)e,) crcdn nsk mounts which hav. no malürities do nol compris€

ırıt(

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BANK MELLAT, MERKEZi: TAHRAN_iRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMİR ŞUBELERİ

3l ARALIK 2020 TARiHİ İrİnanryı,ı KoNsoLiDE OLMAYANFiNANsAL TABLoLARA iı-işrix AçIKLAMA vn »ipNoTıın(Tutarlaı aksi belirtiImcd Bin l'ürk Lirası olarak ifadç edilmi

Il.

INFORMATION RELATED TO FINANCIAL STRUCTURE AI\D RISKMANAGEMENT OF THE BRANCH (Continued)

EXPLANATIONS ON CREDIT RlSK (Continued)

l. Exposurecaiegories:

Extemal risk ratings are not used to determine the risk weights of the risk categories as per üe Article 6 ofüe ''Regulation on Measurement and Assessment of capital Adequacy Ratios ofBanks".

m. Exposures by risk weights:

Rill r.ith§Exposue§ bcforc C.cdilRisk Miıi8alionExposu.cs aiğ cr€dıl RiskMitiPation

u.o

640-668

6.10 668

y"lo .^20

403.12t

403.128

u.sıı

1,-l

2.196

.h75

295

295

y.lf

200.878

200.878

y.lso y.2ü y.l25lIHuctio.! fmE

Equity

prior p€ıiodRirl ı.itht!

Eiposurcs b€for€ c..dilRi§k MjligatiolıExposues ancİ c.ediı RiskMtigation

7.o /.lo

349.480

349.92,|

.A2o

362,s34

362-534

./.75

692

692

%rü) ./.lg

160.171

160.723 -

y.2ü %l2§ Eqüity

n. Informıtion by major sectors snd ıype of counterparties:

The Branch, provides specific provisions for üe non performing loans not less üan the determined ıniniınumrates according to loth, l lttı, l3th and ı5ü articles of the "Regulation on Procedures and Principles forDetermination of Qualifications of Loans by Banks and Provisions to be set aside" pubtished in the OficialGazette dated 22 lwıe 20|6 and numbered 29750. |n addiıion to the non-performing loans, the Branchprovides general |oan loss provisions for the loans and rsceivables which are defined in the samecomminique.

Impaired Crediıs; are the credits that eiıher overdue moıe than 90 days as ofthe reporting date oI are treatedas impaiıed due to üeir cıeditworthiness. For such credits, "specific provisions" aıe allocated as per theProvisioning Regulation.

Past Due Crediıs: aİe the credits that overdue up to 90 days but not impaired. For such cledit§, "generalprovisions" are allocated as peı üe Provisioning Regulation.

(.) The figures fcprc§ent ıhe general provi§ion amount for past due l(.+) The figures rcpresent the specilic provisions amount for impaired(ı.*) The figures rcpıes€n! the non-cash loan ıisk i§ noı included in the

Ar.iculiu..Faming rnd stoclbr.eding

Fi§hcryMıİüfıcıuri.gMoi[g aDd Qurrrying

El€ctİicity, Gıs and wıt r

wholcsal€ and R.tail Ttıd.Ac.om!ıodııiort üDiıiılgTraDşoİtatioİ and T.l.com.Finaıcial h5tiluıiotısReil E§taıc and R.ılıal scfvic€'.Profdsiona] s.rvic.sEduc-ationıl scrvic.3H.alth and social scrvic.sother!Totıl

ldpıir.d Cr.dit! (')

E5

s.39l

42a

42a

3l D.c.mb.r 2020 crdi§tnPıiİtd c.tdi§ P.st Du. crcdi.!

ıOtl08

Pı!! Dü. crditİ (")ıOtl08

1.0tl

l0l l

6.75!6 75l

1.7714174

212E.OE2

aı

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BANK MELLAT, MERKEZİ: TAHRAN-İRAN İSTANBUL TÜRKiYE MERKEZ,A|{KARA VE İZMİR ŞUBELERİ

31 ARALIK 2020 TARiHİ İrisaRIYLı KoNsoLiDE OLMAYANFiNAI{SAL TABLOLARA iı,işriN AÇIKLAMA vE DİPNOTLAR(Tuta.la. aksi bolirtilmedikçe Bin Türk Lirası ("TL") olaıak ifade edilmiştir.)

INFORMATION RELATED TO FINANC|AL STRUCTURE AND RİSK MANAGEMENT OF THEBRANCH (Continued)

lI. EXPLANATIONS ON CREDIT RISK (Continued)

n. lnformation by major §ectors and type of counterparties (continu€d)

]l De..Db.r 2020 cİ.di§lmP.i..d c..dit!

l0El08

Agnc!ltur.Farming and stoc&br.ciing

FisheryMı.ufıcturiD8Mining and Quaİrying

Et.ciİicity, Grs 6nd waıçİ

wtoı.s.l€ and Rc|ıil Tııd.Acc.oDod.lion r.d Diıiı8Tran§ponadon and T.l..om.Financiat ln§titutionsR€al Eştat. aıd R..ld servic.sProfe§sio,al s.rvio.sEducationıl s.İvic!§Hcallİ and social s€rvi.€sOrn.İ!Toaıl

P3.Drcc..di6 lDp.ir.d cr.dit! r) Pı!ı Dü. c..di6 e')

ı.ı99

1.199

s07

5o7

6.?5l6,I5l

J.as5] 455

25Et.3l6

ll2ıl.ıE2

(ı) The figures repres€nt the generaj p.ovision amount for past due loan§.(..) The figures repres€nt üe specific provisions amount for impaiaed loans.(r*r) Thc ligılİc! raprar.nt th. nonüıth loın rilk iJ not includad İn tha r€lıt.d ııbla.

o. MoYements in value adjustments and provisions:

curr€nt P€riodspecific PİovisionsG€neml Provisions

opcning BıIınc.4.|825,43|

Pİovision fo, P.riod1.32ll. l94

Provi§ion R€versı|sl08

oth.rAdjustm.nts Clo§ing BılıIce

5.3956.625

prior p.riod

speciİic Provision§ceneral provisions

op.ninE Bılıncc3.5773.o74

provision for p.riod

6642.357

Provilioı Raval!ılr59

oth.rAdjll§ımcnt§

closingBılınca

4.1825.43l

toa

ı

4ısıç.\

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BANK MELLAT, MERKEZİ: TAHRAN-İRAN iSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMİR ŞUBELERi

3l ARALIK 2020 TARİHİ İrİnanryr.a KONSOLİDE OLMAYANFiNANSAL TABLoLARA iı,işxix AçIKLAMA vB ıipxoııın(Tutarla, aksi belirtilmcdikçe Bin Türk Lirası ("TL") olaİak ifade edilm iştir.)

|NFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (Continued)

III. EXPLANATIONS ON CURRENCY RISK

The Branch with the change in the currency system to floating currency, limits the tota| foreign currencyposition in accordance with the legal limits because of the increasing uncertainties in üe changing currencypaü. The Branch does not hedge is foreign exchange debt instruments and net foreign exchange investmentsby the hedging derivatives.

The Branch holds position in line with ıhe cunency basket of CBRT to hedge the currency risk. ForeignExchange asset-liability management has been effected as such all lates may be kept to be within Iiquidityand credit risks determined within üe framework ofrisk-retum pıofile ofthe Branch and in a way to ensuİethe sustainable profitability. Measurable and manageable risks have been undertaken as per the ratios thatmust be adhered to.

The Branch's foreign exchange bid rates as ofthe date ofthe fuıancial statements and for the last five daysprior to that date are presented below:

Balance sheet EvaIuation3l Dccember 202030 December 202029 December 202028 D9c9mber 202025 December 2020

Us Dollır7,4|947,34057,4063

1,4,138,1,5517

1,6l

Euİo9,1|649,00199,0697

9,|3109,20379,2948

l00 J.p.nçsa YCn7,18057,09307,1273

7,20261,21937,3353

U.A.E. Dirhım2,02l72,00022,0l822,03652,05192,o76l

The simple arithmetical averages ofthe Branch's foreign exchange bid rates for the last üirty days ale

USD:EUR:l00 Japanese YenU,A.E. Di.ham

7,7329 TL9,3999 Tl,7,4284 TL2,|091 TL

?t tT (

,ı

i

a43

The foreign cunency position risk of the Branch is monitored as per the limits and ıneasured by "standardmethod".

ı

BANK MELLAT, MERKEZi: TAHRAN-iRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE İzrvıin şunnırnİ

3l ARALIK 2020 TARİHİ İrinınryıa KoNsoLiDE OLMAYANFİNANsAL TABLoLARA irişriıı AçIKLAMA vn »ipNorıı,R(TutaİIar aksi belirtilmedikçc Bin Türk Lirasl ("TL") olaıak ifade edilmiştir.)

lIl.

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (continu€d)

EXPLANATIONS ON CURRENCY RISK (Continued)

Informatioıt on the foreign currency exchange rate risk of İhe Branch:

furo UsD oıh.r FC Tol!l3ı Dcc.mb.r 2020Araat!

cash (cash in v.uIl, Effectives, cash in Tİ.nsil chequ€sPurchas.d) and Balarıcrs with the cenİal Bank oftheRepublic ofTurkeyBankFinancial Assels at Faiİ Value Through Profit or LossInt€rbank Mon€y Mar*€t Plac€menlsFinancial Assets aı Fai, value Through oüe.comp,ehensivc lncomcLoaııslrvestııen§ in Associates, subsidiaries and Joint v€nfuresHeld ıo M.turity s€curitiesHedging D€İivative Pinancial AssetsTangibl€ A§s€tsIntangibl€ Assetsolher Assels

Totıl Asscı!

36,1.25252,275

78.97634.90l

l0ll94

416.32987.370

93.522 93.522

95l3.058

1,16

l l1.023 295ıs5

621316

Liebiliti€§Bank DepositsFo,eigıı cu.r.ncy DepositsFunds from lnt ıbrü Money MaİketBoarowingsMattciıble secuıities Issuedsuıdry crediıorsH.dging Dcriv.tive Finrnci6l Liabilitiesotheİ Li6bilitiesLiıbtlid..

351,668|03.223

61.216t5.483

41.025

4l2.94Eı19.73l

l.t23

7456.72l

56337

63 ıa&

9534.574

92.a02

16.t21 ı.029

(734,Ntı on-Balınce shecl Position J7.199

N.t offBıııDc. shc.t PolitionFinancial Derivative Ass€tsFinancial Derivativ. LiabilitiesNon{ash t arı§ ].El8 {.J55

3ı Dec.mb.r 20ı9Toıal AssetsToıal Liabilities

N.t on-Bıltnaa sh..t PositionNet oİfBılınce shc.t Po§ition

Financial Dcrivative A§setsFınancial Derivatire l,iabilitiesNon-Cılh Loıns

322.983265.6,15

57.30t

l l9.5l085.56033.9s0

232809

(s11|

366 {Jl 191

The table above shows the foreign cuEency position of üe Branch on the basis of imPortant foİeign currencytyPes. ln accordance with the Uniform Charı of Accounts, foreign curıency indexed assets aıe shown in üefinancial statements as Turkish currency, not foreign cunency.

As of3l December 2020, the Branch has no foreign currency indexed loans (3l Decembel 2019: None)Besides, general provisions amounting to TL 2,|44 TL (3 l December 2019: TL 1.90l has also not beenincluded in üe table above. TL 316 amounted provisi whiçh are uncompensated and notfurned into cash are netting fiom contingencies. (3l

ı

?.ıı(\

a

44

3).

;

537

442.725352.04490.6tı

BANK MELLAT, MERKEZİ: TAHRAN-iRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMiR ŞUBELERi

3l ARALIK 2020 TARiHi İrİna.nryı,.q, KoNsoLİDE OLMAYANFİNANSAL TABLoLARA iıişxiN AçIKLAMA vn nipxorıan(Tutaİlar aksi belinilmedikçe Bin Türk Lirasl ("TL") olarak ifade edilmiştiİ.)

|NFORMATİON RELATED TO FINANCİAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (continued)

Iv EXPLANATİONS ON İNTEREST RATE RlSK

The Branch evaluates intelest ıate in two dimensions. This is mafurity Iisk originating from üe diffeıences ofmaturity structures and repricing risk originating from the fluctuations ofnet interest mafgin. Interest rate ıiskis managed using natural hedges İhat arise from offsetting interest rate sensitive assets with interest ratesensitive liabilities.

lnt€r€sı rate §en§itivity of assets, liabiliıies and off-balance sheeı items (bısed on repricing dates):

3ı Deccmbcr 2020tjp lo lMonth

ı-5yCır3

ov.r 5yaırs

r\*on

ınıarastB.ıring Toıı|

As!at3Cash (Cash in Vault Effectives, cashin Tİansit, cheques Purchased) andBalances wiıh ıh€ centıaı Bank oftheRepublic ofTu*eyBank§Financial Asseıs at Faiİ value Th,ou8hprofit or LossInteİbant Money Marİet Plac€m€nbFiıancial Assets at Fai. value Tkoughoüeİ comprehensive IncomeLoa.s and Rec€ivabıesH€ld to Maluİity s€curitiesother Assets (')

Tot l A$.&

l40.694248.16l

492.413l91,,165

633.107{15.926

389 J89

;

;

4 13.100 l27.t30 2,6E7 r{4.225

Jıi8.860 4 ı3.700 l27.t30l],2E7

706.54ıl].2tt

1.236.935

Liıbiliti.tBaok Depo§ilsother Depo§ilsFunds From Inıeöank MoneyMalkeısundry creditorsMükeıabıe s€curili€s lssucdFunds Borro*€d From odıerFinancial lnstifutionsotheİ Liabilitiesl")

Totıl Liıbiıitic.

608.09l12|.764

60E.09ll2 ı.846

2.099

443525

504.456t.236.4ı0

504.8991.236.9J5

Bılınc. sheet Lon8 Po§itionBılınc. shcoı shorı po§ition

off-Balanct sheet Long Positionoff-Balanct sheet short position

Toııl po§ition

Jıi8..335 4 13.700 t27.830 - §29-869(529.t69) (529.t69)

J88.JJ5 4 13.700 l27.8J0

İ

oı, e ı (\

a

Iiı

45

"Interest rate risk" is defıned as üe impact of interest rate changes on interest-sensitive assets and liabilitiesofüe Branch.

a.

() "other Assets" line include§ Defeİrcd Tax Assels, Taİ8ibte aııd lntangible Assels aııd oücr Ass€ts.,c) shareholders' €quity, provisions and tax liability is presented under'other liüiliğs'item in "Non-intirEs1 bearing".

2.B9

*i

ı _]Months

3- ı2Months

BANK MELLAT, MERKEZi: TAHRAN-iRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA vE izuİn şunnı,rni

31 ARALIK 2020 TARİHİ İrisaRlyıı KoNsoLİDE OLMAYANFİNANsAL TABLoLARA irişriN AçIKLAMA vr nipıorı-l,R

lar aksi belinilmedi c Bin Türk Lirasl olarak iladc cdilmi tr

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANcH (continued)

a

3l December 20l9tJp to lMoİth

t _3Month§

3_ 12Month§

ı_5yaıls

over 5yaırs

Nonlnteae§aBcsring Totıl

cash (cash in vaull, Effectives, Cashin Trüısil, Cheques Puİchased) andBalancrs wiü üe cenııal Bank oftheRepublic of Tıı*eyBanksFinancial Assets at Fair value Throughprofit or Losslnterbank Money Maİkel PlacementsFinancial Ass€ıs at Fair value Thİoughoth€r comprehensivç IncomeLoans and RcceivabIesHeld to Malurity securitiesOther Asse§ (')

Totıl Ass.tl

79.734216.02|

400.5t5240.6t2

4t0.3l9456 703

414 414

23 4l9 6E,620 4.134 13,396

l295.756 2] 4l9 6E.E20

l2.55765EJ72

l2 5581.02J.390

Liıbilitic§Bank Deposiı5oıher DcposiısFunds F.om tnte.bank MoneyMarkeısundry creditorsMaıketable securities I§suedFunds Boİrowed From othe,Financial lnstifutionsother Liabiliıies c')

Totıl Lİıbiliıi.§

19342.36l207.057

342.36l207.136

40,7 407

7ll790

412.775ı.022.600

473.1861.02J.J90

Bıl.İc. sh..ı Long Po§itio,Bılanca shcct short po,ition

off-Balane she€t Long Positionoff-Balan.t shect shon po§ition

Totıl Polition

294.966 2J .lı9 6E.t20 361.22t(36.1.22t)(364.22J)

291.966 23 1ı9 6t.620 (36J.22E)

a

f , ı t c\

ıoı

46

IV. EXPLANATIONS ON INTEREST RATE RISK (Continued)

Int€rest rate sen§itivity of a§sets, liabilities and off-balance §heet ıtems (based on repricing dates):(continued)

(') "othcr Assets" line includes Deferred Tax Asse§, Tangible snd Intangible A§seıs and other A§sets,c.) sha.reholde.s' equity, provisions and tax liability is prcsent€d under "oü€r liabilies" item in "Non-interest bcaring".

BANK MELLAT, MERKEZi: TAHRAN-iRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE iZMİR ŞUBELERİ

lv.

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (Continued)

EXPLANATIONS ON INTEREST RATE RISK (Continued)

b. Effective 8verage interest rates for monetary financial in§iruments

Interest rates in the below tables are üe weighted average rates ofthe related balance sheet items.

3l December 2020 Euro(%,

UsD(%\

Ycn(%)

TL(%,

As§et§cash and central Bank ofTuİkeyBanks aDd other InstitutionsFinancial Ass€ts at Fair Value Through Profit /Los§tnterb8nk Money Maİkct PlacementsFinancial Ass€ts at Fair Valuc thfough otherComprehensivc IncomeLoans and ReceivablesFinançial Assets Measured al Amorlis€d co51

9,19l4,50

7,00 l 1,13

LiıbilitiesBank Deposisoüer DepositsFunds F.om lnterbank Money MarketSundry CreditorsMa.rkçtable Securitieş IssuedFunds Borrowed From other Financial Instifutions

4.00

]l December 2019 Euro('/.',

UsD(%\

Ycn(%,

TL(%l

As§ct!cash and central Baok ofTurkeyBanks and oth€r lnstifutionsFinancial Asset§ aı Fair Valug Through Profit /LossInterbank Moncy Maİket Plac€mentsFinancial Assets at Fair Value through oüerComprchensive lncomcLoarıs and Reccivab|csFina.cial Assets Measured at Amorti§ed cost

8,787,00

8,16

Liıbilitie§Bank Dcpositsoıher DepositsFunds From lntcrbank Money Ma*etSundry CreditorsMaıketable securitie§ lssuedFunds Borrowed From othcr Fiıaıciaı lnstitutions

4,00

a

l

o

an

a

47

3ı ARALIK 2020 TARiHi irİnenryı-a KoNsoLiDE OLMAYANFİNANsAL TABLoLARA iı,işrix AçIKLAMA vE DipNoTLAR(Tutarlar aksi bclirtilmedikçe Bin Türk Lirası ("TL") olarak ifade cdilmiştir.)

7,00

BANK MELLAT, MERKEZi: TAHRAN-iRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA vE iZMiR ŞUBELERi

3l ARALIK2020 TARİHİ İrİsaRIyü-A, KoNSoLiDE OLMAYANFİNANSAL TABLOLARA iı,iŞxiN AÇIKLAMA VE DiPNOTLAR('ruta.lar aksi belirtilmedikçe l]in Türk Lirasl("TL") olarak ifade edilmiştir.)

INFORMATION RELATED TO FINANC|AL STRUCTURE AND R|SK MANAGEMENT OF THEBRANcH (continued)

Iv. EXPLANATloNs oN INTEREST RATE RISK (continued)

c. lntere§t rate ri§k resulting from banking book

According ıo "Regulation on Equities of Banks" published in the ofİcial gazette no 2E756 dated5 September 2013 and items followed in the trading book; int€ıest İate risk is arising from all balance sheetand off-balance §heet items which are sensitive to interest except subordinated debts which are taken intoaccount when equity is calculated. The interest rate risk resulting repricing risk, yield-curve risk, base riskand option risk.

Repricing Risk

The repricing risk is defıned as probable loss fiom bank's net intelest income and negative economic valuecaused by the interest rate flucfuations. on demand assets and liabilities in the Branch's balances sheet aIenot affected the flucfuations of interest rate change. Assets and liabi|ities, which having a fixed term, aıesensitive to the repricing risk.

yield curve Risk

The yield curve risk is defined as probable loss fiom bank's net interest income and negative economic valuecaused by the alteration of yield curve. The Branch has not used ftnancial instruments which aıe exposed toüe yield curve risk. The Branch has not exposed to the yield curve risk.

Base Risk

The base risk is defined as pıobable loss from bank's net interest income and negative economic valuecaused by üe base of int€rest rate incıease or decrease in the Bank's operations. The Branch has not used üediffer€nt base ofthe operations.

option risk

The option risk is defined as pıobable |oss from bank's net interest income and negative economic valuecaused by the option righVliability inc|uded embedded. The Branch has not used derivative instruments.There is no inıeresı sensitive items including option except time deposit and üe pan of arııount is immaterial.

İ

2f.ııQ\

*d

.I

48

BANK MELLAT, MERJ(EZİ: TAHRAN_İRAN iSTANBUL TÜRKiYE MERKEZ,ANKARA vE iZMiR ŞUBELERi

3l ARALIK 2020 TARİHİ İrinARryıı KoNsoLİDE OLMAYANFİNANsAL TABLoLARA iı,işxiN AçIKLAMA vn »ipxoıııR(Tutarlar aksi bclinilmedik Bin Tü.k Lirası *TL olarak ifadc cdilmi

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANcH (Continued)

EXPLANATIONS ON POS|TION RISK OF EQUITY SECURITIES IN BANKINC BOOK

Posıtion risk of equi§ shares on banking book

a) Relation of risks with gains accounted under equity and analyzing according to their aims includingstrategic reasons and the accounting policies applied and general information about valuationtechniques wiü assumptions in this application, üe €lements üat manipulate valuation and imporıantchanges:

The branch does not have stocks that are not traded on the stock exchange.

b) For balance sheet values of equity investments, fair value and for those traded on the stock exchange,üe comparison with üe market price ifthe maıkeı value differs significantly from the faiı value.

.3ı D.c€mber 2020 compıri§on

Fıiİ vılu.Equity lnv.stmantsfiıınciıl Ass.ıJ ıt Fıir vılu. Through Profiı /

ı Ir.!Tİaded on stock Exchange

2 AsrociaıasTraded on stock Exchange

3 subsidi.ri.sTnded on slock Excha,ıse

Bıl.ncc shccıvılu.

389]89

3E9389

Jl Dcccmber 20l9

Equity lnvertmentsFiDııciıl Ar!.ts ıt F.ir vılu. Through Pİolit /

ı LossTİaded on stock Exchange

2 As3ociıtasTİaded on stock Exchang€

3 subsidiıri.sTraded on stock Exchange

İ1,1,n.e sheetvalue

4ı,ı4l4

compafison

Fıiİ vıluc

4l44|4

Msrket vıluc

c) Realized gains4osses, revaluation surpluses and unrealized gains/losses on equity securities and resulısincluded in core and supplementary capital:

None.

a

iıııC\

aa

49

}tırkel vıluc

(Tutarlar aksi belinilmedi kçe Bin'l'ürk t-i.ast ("TL") olafak ifade edilmiştir.)

INFORMATION RELATED TO FINANC|AL STRUCTURE AND R|SK MANAGEMENT OF THEBRANCH (Continued)

vI. EXPLANATıoNS oN LlQUlDtTY RtsK

The liquidity risk ofthe Branch is üe risk ofbeing unable to fulfill is payment obligations on time due to nothaving enough cash sources or cash inflows to finance its cash outflows fully and on time due to cash flowinstabilities. lt has been evaluated in two main categories:

Funding Liquidity Risk: ıt is a kind of risk which does not meet üe any unexpected loss and non defaultingdebts and liabilities.

Maİket Liquidity Risk: It is a kind ofrisk which consists ofthe position that cannot be sold without affectingmarket price due to insufficient market depth or market conditions' deterioration or that cannot be completedwith the position ofmarket price for any reasons.

a. lnformation on liquidity risk management, inchding th€ risk capacity of the branch, ıheresponsibilities and structure of the liquidity risk managem€nt, the reporting of ıhe liquidity riskwithin the bank, the llquidity risk stralegy, and how the policies and practices are communicatedto ıhe board and |ines of business:

The applications and responsibilities related to the liquidity risk has been determined according to theTreasury Liquidity and Market Management Policies and Practices approved by Boaıd of Managers. TheBranch's liquidity policy is to own sufficient liquidity reserve and opportunities to meet its liabilities even incases ofstress, resulting from the market conditions or other conditions specific to üe Branch.

Branch has a high-risk coverage ratio due to its capital and asset / liability strucfuıe. The liquidity coverageratio oflhe Branch which is able to meet the cash outflows with high quality liquid asset stake is consideredto be well above the market averages and quite high. There are a|so ready-to-use limits for the CBRT.

ln the daily / weekly / periodically structured meetings ofihe Assets and Liabilities Committee and üe Riskcommittee attended by the senior management, the indicators relaled to the liquidity stafus are examined andüe liquidity risk is addressed. tn addition, the Board of Managers is informed through üe regular reponsprepared by the Risk Management Department and the Audit committee.

Foı liquidity risk management, ıhe Risk Management Unit monitols the funding and liquidity risk, marketconditions, the distribution of accounts in different foreign cunency types, the maturity structure, cosıs andexpected fufure cash flow obligations.

The Risk Management Unit monitors the limits on liquidity risk determined by the Boald of Managers. lıaddition to these, the Risk Management Unit implements periodic liquidity stress tests to measure the effectsofadverse scenarios on the liquidity situaıion ofüe Branch. The Fund Management Department manages üefunding and liquidity risk to prevent inadequate funding at any time or any source and regularly reports onthe liquidiıy position ofthe Assets and Liabilities Cornmittee and the Branch's Iiquidity position. The GeneralAccounıing Unit Financial Reporting Service monitors the liquidity coverage ratio and regularly reports tothe BRSA.

'tıct

a

a

ae

BANK MELLAT, MERKEZİ: TAHRAN-İRAN iSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMiR ŞUBELERi

3l ARALIK 2020 TARiHi İrinanryıa KoNsoLİDE OLMAYANFiNANSAL TABLOLARA İı-işrİN AÇIKLAMA VE DiPNOTLAR

,

50

BANK MELLAT, MERI(EZİ: TAHRAN_iRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMiR ŞUBELERİ

3ı ARALIK 2020 TARiHi irisıRıyl-A, KoNsoLiDE oLMAyANFiNANsAL TABLoLARA iı-işxiN AçıKLAMA vB nipNorıeR(l'utaJIaİ aksi belirtilmedikçe Bin Türk Lirası ("TL") olarak ifade cdilmiştir_)

INFORMATION R.ELATED TO FINANC|AL STRUCTURE AND RiSK MANAGEMENT OF THEBRANCH (Continued)

Vl. EXPLANATIONS ON LIQUlDITY RISK (Continu€d)

b lnformation on the centraıization degree of liquidity managem€nı and funding §trat€gy snd thefunctioning between the Bank and the Bank's subsidiaries

The Branch's liquidity management is performed by the Asset and Liability Management. The branch has nosubsidiary subiect to consolidation.

c. İnformatioı on the Bank's funding strategy incıuding the poıicies on f[nding ıypes ınd v8ri€ty ofmaturitie§

Branch spread to the base of demand current and time deposit accounts and that a stable, long-termdiversification and aims to be the source ofthe funds used. Ratio of liquid assets to total assets ratio and riskindicators related to liquidity, credit and the ratio of funds, issues such as the concentration in provided fundsare being closely monitored.

ç. lnformation on liquidity management on the basis of currencies constituting a minimum of fivepercent of th€ Branch's total liabiliti€s

The total liabilities of branches are in Turkish Lira, Euro or US Dollar, and GBP and Iranian Riyal aıe inforeign currency. TL liquidity of the branch is managed by cash and cash convertible securities held byCBRT and Banks. TL assets are used for funding TL assets and FC liabilities are used for funding of FXassets. Foreign currency funds are provided from foreign currency denominated borrowings and foreign bankdeposits held in our Branch. Foreign cunency liquidity is held in correspondent bank accounts within limits.

d. lnformation on liquidity ri§k mitigation technique§

Liquidity risk is mitigated by using techniques such as maintaining high quality liquid asset buffer to coverpossible fund outflows, diversification of funding sources so far as possible and inclusion to th€ base,

homogenizing the mafurity distribution of repayments as faı as possible, obtaining limits fiom fundinginstitutions to use \ühen necessary and ensuring that a determined portion of funding sorıİces are comprisedof deposis. ln addition, core deposit analysis is performed and concentration on collected funds are closelymonitored.

8. lnformation on the u§e of§tress test§

In order to analyze the source of the possible liquidity insufficiencies and whether comfortably move existson existing off-balance sheet and balance sheel positions releyant with liquidiry risk expectation, th€

scenarios are implemented by Risk Management Directorate and 3 types liquidity stress tests are prepared byBanking Regulation and Supervision Agency (BRSA). These includes stress test scenarios are sPecia| to theBranch, related with üe overall market or scenarios take in consideration boü of üe sifuations. stress tests

related with liquidity risk are repeated at monthly periods. Results are tracked with key risk indicators andmonitored by Senior Management.

a

a

a

.e

5l

'ı3l çl

BANK MELLAT, MERKEZi: TAHRAN-iRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMiR ŞUBELERİ

3l ARALIK 2020 TARİHi İrinı,nryı-a KoNsoLiDE OLMAYANFiNANSAL TABLOLARA iıişxix AçIKLAMA vE DipNoTLAR('futallff alisi bclirtilmedikçc Bin Türk Lirast ("'tL")oIarak il'ade edilmiŞtir.)

İNFORJYIATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANcH (continued)

f. Genera| information on urgeot and unexpect€d liquidity situation pıans

Necessary strategy and procedures for the management of possible liquidity crisis are determined with üeLiquidity Contingency Plan, which is approved and reviewed by the Board ofManageıs. The plan ultimatelyaims to protect current and participatin8 account ho|ders, lenders and shareholders. The basic indicators ofthe Liquidity Emergency Action PIan have been identified. and if the unexpected developments in the|iquidity situaıion or other indicators ale triggered, the plan is put into practice. The Risk Comminee isresponsible for monitoring the plan, and the Asset and Liability Committee is responsible for itsimplementation.

Presentation of finaIıcial liabiIities by remaining contractual maturities:

The following table is prepared before the Branch's liabi|ities are undiscounted and based on the earliest dateto the payment.

3l Decemher 2020LiıbilitiesDcposit5BorrowingsTotıl

Damaıd ındUp to ı Month

729.931

729s37

l - 3 }lonths3_ ı2

Months ı -5 Month! ov.r s YGıİ3 Totıl

129.937

729.937

Jı D.c.mb.r 20ı9Liıbiliti.§DepositsBoaroırin8sTotıl

D€mıİd ındUp to l Month

549.497

s49.491

ı -3 Monlhs3_12

iuonths ı-5Monıhs over 5 Y.ırs Tot l

549.497

s49-191

iı

?ağrç'

a!ı

a

52

vI. EXPLANATIONS oN LIQUIDITY RIsK (continued)

BANK MELLAT, MERKEZi: TAHRAN-İRAN iSTANBUL TÜRKİYE MERI(EZ,ANKARA VE iZMiR ŞUBELERi

3l ARALIK 2020 TARİHİ İrİnaRryıa KoNsoLiDE OLMAYANFiNANsAL TABLoLARA iı-işriN AçIKLAMA vr nipNorıeR('I'utaİla. aksi belirtilmedi kçe Bin'l'ürk Lirasl ("TL") olarak ifadç edilmiştir.)

vı.

INFORMATION RELATED TO FINANCIAL STRUCTURE AIID RISK MANAGEMENT OF THEBRANCH (Continu€d)

EXPLANATloNs oN LIQUIDITY RlsK (conıinued)

Liqııidity coverage Rıtio

Jl D.c.nb.r 2020Hti-Qu.lit! Liquid Aıı.t!l Torll high_quality liquid ıss€ts GrQLA)c.!h oütnoı!

R.tıil d.po§it.nd dcpositl fTom small bıısi.c§s

3 siablc d.posiıja k35 sı.bıc d.posiısJ U.5ccuı!d wıtol6.1e fuİdin86 opc6ton.1 d.posiB7 No$-opcrııion5ldcDosil5t Ud.cutd fiüdin89 s.cuİ.d tıholcsalc fiüdjngl0 orhğ 8h otrdtM of v,tich:l l oudlows rclııcd !o dcri\ativ. exposures and oü.r

collaı.r.l rcquir.mğnıl12 oudlow! r.|ıt.d to r.sEuctuİ.i financial insEun.nls13 Pa}mc[l commitncııt! aıd oth.. off_balano. sh.tı

commitm.ııb grını.d foİ d.bb to fi.m.irl m.rİctsı4 obcr r.vocablc off_bslı.c. §hc.ı c-omnih.ot! üd

c.Olrıctu.l obıi8rtiolısI 5 oihc, i.r€vocrbı. o. cooditioüıly r.voc.bı. otr_

balınc. dı..r oöli8ations15 Toııl C-ırh oıııtıoısc.!h l.ıor!17 se.urcd r.ctivableslt Un§..ur.dr.c.ivabl.s19 othcr cash innows20 Tolrl corh InJıo|9,

Toı.lU.ıeigtt€d Y.lu.

IL+rC l,C

Toııl w.ighl.d v.lu.(Av.log4 r)

TL+fc ı,C

6J0.755 442.713

61.27ll s.962 5.95E

3-47257.884

66J.4ğ1.5l E

74.18958,1.72,7

].3965?,882

6.2ıl1.502

12,229392.550

l745 7EE

617.7t2319

29_6765E1_721

ı?05 788

a2l.tıt316

28.892392-550

3,260 1.164 57762a.37l

52842t..304

458 29345E.ı9]

92 22l92.22l

458 293rısE,29J

2|22

23

Toıol QL4Toıaı Neı Cast ouılıolü,sLiaı].İitf Co|..ğA. Roıio ll/.)

6]0,755l74.]83361,7l

M2-113336.062l31,73

(t) The aver8ge of th€ liquidity coverag. mıio cilcularcd by taking üc simpıe monüly aİithm€tic av€rsg€ for üe l&st

üree monüs, average ofthe liquidity cove.ag€ ,atio calculaled by t king üe simple weckly a.iıhmetic average for the ldstthre€ months

curr€nı period

TL+FcFc

Highest4l8,0l

]]9,28

Datel3.10 2020

4,1l,2020

Low€st306,76

l26,69

Date14.12 2020

2| l2.2o20

Averıge368,9J

132,05

a

a"3.ct4

.. 1

53

The table below presents lowest, highest and average liquidity coverage ratios as of3l December 2020:

6l.]56

92 22|92.2rl

BANK MELLAT, MERKEZİ: TAHRAN-iRAN İsuxnuı TÜRKİYE MERKEZ,ANKARA VE iZMiR ŞUBELERi

31 ARALIK 2020 TARiHİ irinanryı,a KoNsoLİDE OLMAYANFİNANsAL TABLoLARA iı,işxiN AçIKLAMA vE DipNoTLAR(1'utarlaı aksi belirtilmedikçe Bin Turk Lirası ("TL") olarak ifade cdilmiştir.)

VI.


EXPLANATIONS ON LIQUIDITY RISK (Continued)

Liquidity coverage Ratio(continued)

Tot l Unwcight.d vılu.(Awng4 r)

TL+FC

Totıl weithi.d v.lu.

Jt lı.c.6b.İ 2019High-Qü.ü.y Liquid A§§..sl Toıat high{uajity liqüid assets (HQLA)C.!h oufow!

Rğtail deposiıs aDd deposil§ fion mall business

3 slable deposns4 Les§ §table deposiıs5 Unsejured *lıolesale fiındİı86 op€6tio.5l deposits7 Noı-op.rationat d.posib8 Uns€aoİed funditrg9 secüİed whoıesal€ fı]İdiıgt0 oü€r cn§h oudows ofwhichil l oudlo*s related to deriEtive €xposurcs and oth.r

cllıateral rcquiremenısoudlows rcIat€d to r€§tiü.türed fi.ecial

12 inst utııml§l] Payİnenı commifu€n§ and other off-balaDc. §h€et

c.mmitmcnl§ granıen for dcbl§ lo fiııanci3l

14 oü€r r€vocabl€ off-balance sheet commitD6ts md§ontractual obli gations

15 other iİİ€vocabl€ or conditionally revocabIe otr-balance sheet obli8aüions

16 ToıaI cosh ouıllorıüscıü l.fiowJ17 secüred r€ceivabl€sl8 u[secuedreceivables19 oüeı cash inflows20 loıal cosh l^lıows

ıt TL+Fc

.ı82.156

Fc

262,237

69.62733.08836.539

as2.65l1.0l7

l l3,ı |93]E.5l6

69.ail533,00]36,535

259.3rı1.016

ll0.945l4?.]50

5.30E1.654

].654384.0r7

25445.247

3]E.5l6

5.3041,650

3,65]l91.982

25444.31a

I47.350

L074 94,7 288369.6l]

2,I5

197.s6ı

94 76594.765

4z2-682422.6E2

9494.

165

765

2| Toıal IIQlül22 Toıal Neı CLfh ou.]ıows

482.15691.4o4

23 495 l

(l) The aveıage of ü€ liquidity cov€rage ratio calculated by taking the sirnple monüly aıiümetic average for ıhe last

three months, average ofüe liquidity cov€rage ratio calculaıed by taking tjıe simple weekly aİiÜmetic average for the lastüfee monüs

current period

TL+FCFc

Highcst545,30

Dste6,1l20l9

27.10 2019

Lowe§t463"79

Dıt.22.10-2019

l8.12.20l9

AYeaıga495,38

268,0055l 2l1

ı

a

t

2

.ıra

The table below presents lowest, highest and average liquidity coverage latios as of3l December 2019:

orr_ur)42z.6az

262,23,|l02-791255,10

.tıç\

54

BANK MELLAT, MERKEZİ: TAHRAN_İRAN iSTANBUL TÜRKiYE MERKEZ,ANKARA vE iZMiR ŞUBELERi

3l ARALIK 2020 TARİHİ irinanryı,ı. KoNsoLiDE OLMAYANFiNANSAL TABLoLARA iı-iş«iN AçIKLAMA vB oipıoııa.n('l'utarlar aksi belirtilmedikçe Bin Türk Lirası ("TL") olarak ifade çdilmi ştir.)

vI.

INFOR.IVIATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (Continued)

EXPLANAT|ONS ON LIQUIDITY RISK (Continued)

Breakdown of ass€ts and liabilities according to their outstanding maturities

(l) A§sets that aİ€ nec€ssary for banking activiıie§ and ıhat cannot b€ liqı.ıidated in the §hort-lerm. such as ıangible assels,

subsidiaİi€s, §tationary, pre-paid exp€nse§ and non-peaforming loans, aİe clas§ilied in this column.(2) shaİehold€rs' Equity is prcsenıed undet üe "orher Liabilities" iı,em in ıh€ "Unal|ocated" colunm.

lnformation on securitization positions

t]ptol l_J J_12D.m.Dd Month Months Month§

l _5year§

over 5 Llnclıs§iliedyeır§ e) '|'olaI

l Deccmber 2020

cash and üe cenıal Bank ofıheRepubIic ofTu*eyBanksFiıancial A§set§ at Fair Value ThroughProfiı oİ LossInteıbsnk Money Market Placemen§Financial Assets at Fair value ıhaoughoüeİ comprehensive IncomeLo&rs and Rec€ivab|esFinancial A5seı5 Measured atAmortiscd costoıher Assets (')

l31 661 6J].l0?a45.925

]ı9

il 4 l3.7m l27.E3o 2 681 lu.

l A§set§I

941.367 lJ7.67l .l

115

l4,157 l27.E30!2,830

l5.m6l].ıt6

1.216.9]5

l,iıbilitiesBank Deposit5othe, Dcposit§Funds Borrowed Ffom oüet FinancialInstitıltionsFunds From lnterbank Monçy MarketMarketable securities Issued

Sundry crediıorsothe, Liabilities ('*)

otıl Liıbiliti.s

608 09ll2l764 E]

6oE.09l|2l.a46

2-099

7!1.9s4

2ü.4t]

443

525

504 4J65o4.a56

2,0995o4.E99

ı.236.9]5

§ Gep l.]?.l]6 a l4.ı5? ı27.a30 ({E6.§50)

ofr_B.lı.c. sb..r Potitio. (N.l)Rcc.ivabla§ from fi naıcial d€fiv.tjvc

Plyables ıo finarci.l derivative inmumğıl§corltin8.nci.s

Tolıt LiabılilidLiqoidity c.p

E57 28EJ49,825307.46J

19.135?90

78.9a5

zao

2t0

68.820

6a_820

0 l6.t4t ı172.175 |

(155.92r)

of_Bılınc. ste.ı Polition (N.t)Reccivıbl.s tom fi,dcial denvıtiv€

Payables ıo fiıancial dcrivative instnrnenıs

t

laırG\

a

o

ıeNone,

495,440

44s-926

]89

il l9

4l9

BANK MELLAT, MERKEZİ: TAHRAN-İRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMİR ŞUBELERİ

31 ARALIK 2020 TARiHİ İrİsARIr,I,a KoNsoLiDE OLMAYANF,İNANsAL TABLoLARA iı,işrix açr«r,AMA vE »ipNorr,an(Tutaİlar aksi belirtilmedikçe Bin Türk Lirası (,TL ") olaİak ifade edilmiştir.)

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RiSK MANAGEMENT OF THEBRANcH (continu€d)

VII. EXPLANATIONS ON LEVERAGE RATIO

As of 3l December 2020, lhe leverage ratio calculated by three-monü avelage amounts is 38,99 % (3lD ec emb er 20 | 9 : M,27 vo\.

The leverage ratio table prepared in accordance with the communiqud "Regulation on Measuıement andAssessment of Leverage Ratios of Banks" published in the Official Gazette no. 28812 dated5 November 20 t3 is presented below.

on_bılıncc §heet ı§setson-balanc€ sheet items (excluding derivarive financiat inst uments and cİ€ditde.ivatives but including cal|ateral)(Ass€ts d€ducbd in determining Tier I capital)Total on-baIance sheet risks (sum oflines l and 2)

Dcıivıtive linınciıl instrumtnt§ ınd credit dcrivıtivesReplacement cost associatfd with all deİivative instİuments and creditderivaıivesAdd{n amounts foı pFE associated wiü all derivative instrument§ and creditdeıirativesTota| risks ofderivative fmarıcial inslruments and credit derivatives (sum ofline§ 4 to 5)

sccurifics or commodity linancing tİınsıctions (scFT)Risks from scFT assc§ (excluding on-balanc€ sheet)Risks from brokerage activities related exposuresTotal risks related with secı]İities oİ clmmodity financing tİansactions(sum oflin€s 7 to 8)

other off-b.lınc€ sheet trınsıctionsGaoss notional amounts ofoff-ba!ance sheet tıEnsactions(Adjustrnenls for conv€rsion to credit equivalent amounts)Total risks ofoff_balaJıce §heet itçm§ (sum ofIines l0 and l l)

cıpitıl.nd totıl ri§k§Ti€r l capitalTotal ri§ks (sum oflines 3, 6, 9 and 12)

Levcrıg€ rıtioLeveİage ratio

3l December 2020(!)|.249.640

5.320

5 -320

48E,E20l,253.760

38,99

l23

(1.200)|.24E.440

4

5

6

789

l0ll|2

l3l4

l5

3l Dectmber 2019(l)

1.277

l -271

455,2El1,023,303

44,27

c) Amounts in the table are thre€-monü average aİnounts.

EXPLANATIONS ON FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIESVIlI.

The estimated fair value of demand deposits refers to the amount to be paid on demand. Estimated fair valueof fixed rate deposits is calculated by using discounted cash flow using market interest rates applied tosinrilar loans and other debts.

Fair yalues of loans are çalculated discounting future cash flows at current market interest rates for fixedrateloans. The carrying values of floating-rate Ioans are deemed an approximation for their fair values.

The table summalizes the book value and fair value of the financia| assets and liabilities that wele notaccounted by the yalues in Bank's financial statements. Book value is üe sum of the acquisition value andaccumulated proflt share accruals.

t

!, ı t c\

taüa

56

|.028.123( 1.097)

1.027.026

(Tutarlar aksi belirtilmedikçe Bin Türk Lirası ("TL") olaıak ifade edilm iştir,)


VIIL EXPLANATIONS ON FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES (Continued)

Fitrınaiıl As§atsInterbank Money Market PlacemeılsBanksFinancial Assets at Fair value Through Profit oİ LossFinancial Assets at Fair Value through oüeİ Compİehensive lncomeLoan§ (')Fitr.nciıl Liıbiliti.sBank Deposit§other DeposiısMiscellaneous ables

Book vılu€3l D€cemher 2020

5t7,t53

Fıi. Vıluc3l Dec€mb€r 2020

526319

445.926389

456.7034|4

69.262550.003341.388208.209

406

l4l,538132.036608.09ll2l 846

2.099

c) It is observed that the fair value approximaıes to the recorded value

FiDınciıl As§et§Interbaİık Money Mark€t Placemen§BanksFinancial Assets at Fıir value Through P.ofit or LossFinancial Assets at Fair value through oüer comprehensive IncomeLoans (*)

Finsnciıl Liıbilitic§Bank Depositsother DepositsMiscelıaneous

Book vıIue3ı December 2019

526.379

Faia Vı|ue3l D€cemb€r 20ı9

526379

456.7034|4

456.?03414

69.262550.003341.388208.209

406

69.262550.003341.388208.209

406

e) It js observed that the tbiİ lalue app.oximates to thc recorded value

EXPLANATIONS ON THE ACTIVITIES CARRIED OUT ON BEHALF AND ACCOUNT OFOTHER PERSONS

The Branch does not perform purchase§, sales and custody services in the name ofoüers. The Branch has no

fi duciary based transactions.

+tü

İ

't 61ç\

BANK MELLAT, MERKEZİ: TAHRAN-iRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE iZMiR ŞUBELERi

31 ARALIK 2020 TARiHİ irİsaRIyI-A. xoNsoLiDE OLMAYANFİNANSAL TABLOLARA iı,işrix AÇIKLAMA VE DİPNOTLAR

TFRS 7 the standard of "Financial Instruments: Disclosures" İequires to be classified according to certainlevels, with items presented with fair values on the financial statements. These levels are based on theobservability ofİhe data used to calculate the fair value. The classification of üe fair value is as follows:

Ix.

5,1

BANK MELLAT, MERKEZi: TAHRAN-iRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMİR ŞUBELERİ

31 ARALIK 2020 TARiHİ irİna,Rryı,a KoNsoLİDE OLMAYANFİNANsAL TABLoLARA iıişxix AçIKLAMA vn nipxoııan(Tutarlar aksi belirtilmedikçe Bin Tü.k Lürası ("TL") olaİak ifade edilmiştir.)

x. EXPLANAT|ONS ON RISK MANACEMENT

The footnotes and related explanations prepared in accordance wiü the "Communiqud on Public Disclosuresby the Banks" published in the Official Gazette No. 295|| on23 October 20l5 and entered into force on 3lMarch 2016 are given in this section. Since the standard approach is used for credit risk in calculating thecapital adequacy of the Branch, the tab|es that should be prepared within üe scope of the intemal ratingbased approach are not provided.

Risk Management system, created for the systematic management of the risks the Branch is exposed to; Itrefers to the Board of Managers, the Audiı commiüee, the Risk committee and the Risk Management Unit.The Board of Manageıs owns the Risk Management System in the Branch; lt ensures the establishment ofanefİ'icient, sumcient and appropriate risk management system within the branch and the continuity of üissystem. The main purpose of the Branch Risk Management System is through üe policies, implementationprocedures and limits determined to monitor, conhol and change the risk-Iefum strucfure of üe Branch'sfufure cash flows, accordingly, the nafure and level of the activities. to ensure that risks are identified,measured, monitored and controlled.

Risk manag€ment aim and policies

Risk is defined as the probability of a reduction in economic benefit in the event of a monetary loss or an

expense or loss related to a transaction oİ activity.

The branch is exposed to some risk due to the activities it carries out to achieve its goals. The purpose ofrisk management is to defırıe, measue, report, monitor and control the risks exposed thİough determinedimplementation procedures aııd limits, and determine the intemal capital requirement compatible wiü üerisk profile to be adopted in üis context.

The following points are İaken into account in determining üe risk management policy and imPlementationprocedures:

o Branch's vision, mission, strategy and goals,ı primary and weighted fields ofactiyity ofthe Branch, products, and their volume and characteristics,o organizational structule ofthe Branch, human resources,. past incidents and experiences related to risks to be exposed,. Database coverage and quality for risk management,o Technological competence of üe branch and its level of contribution to risk monitoring and

management activities,. Intemal capital requiıement and actual equity level and corresponding risk level

Risk management policies and procedures are determined and developed by considering factors such as the

size of the branch, the scope and complexity of the activities, and the variety of products used.

when evaluated from these angles, management ofcİedit risk is of great importance.

f"!rç1

ı.o

58

INFORMATION RELATED TO FİNANCİAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (Continued)

a

BANK MELLAT, MERKEZi: TAHRAN-iRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMiR ŞUBELERi

31 ARALIK 2020 TARİHi irinı.nrrrı^A KoNsoLİDE OLMAYANFİNANsAL TABLoLARA iıişxix AçIKLAMA vn nipxorr-ı.n(Tutarlar aksi belirtilmedikçe Bin'l'ürk Laİas| ("Tl,") olaral ifade edilmiştir.)

x.


EXPLANATIONS ON RISK MANAGEMENT (Continued)

ı. Expianation on risk management and ri§k w€ighted amounts

l. Risk weighted amounts

Risk wcighted Amoünt§Minimum cıpitrlRtquiramcn!s

I

234

5

61

8

9

crcdit tisk (excluding counbrparty credit risk) (cCR)of *hich standardised approach (sA)of ı,vhich intEmal rating-based (lRB) approachcounterpany credit riskofwhich standardised approach for counterpary creditrisk (sA{cR)of which intema] modeı method (lMM)Equily position iı banking book unde. basic ,iskweighting oİ inte mal .ating-ba§edEquity inv€stın€nts in fimds - look-ıfuough app.oachEquity invesüncnts in funds - mandate-basedapproachEquiİy inv€stmen§ in fund§ - 1250% risk weighlingapproachsettlement risksecuritisalion exposures in barıking bookof which IRB ralings-besed approach (RBA)ofwhich IRB supeoisory formula approach (SFA)of which srsimplifi€d sup€rvisory formula approıch(ssFA)Müket riskof ı^,hich standardised appİoach (sA)of*hich intem8l model approaches (tMM)opcrational riskofwhich bl§ic indicalor approachof which stand.rdised approachof which advanced measuİemerıt 8pproachAmoun§ below üe üresholds for deduction fromcapital(subject to 25oplo risk weight)Fıoor adjustrnenıTot l (ı+4+7+E+}lo|l1+ı2+ı6+ı9+23+24)

3lDcc.mb€r 2020282.t23282.823

3l December 2019 Jl Deccmber 202022l 5s2 22 626221,552 22.626

l0ll|2l3|4

l5l6l1l6l9202|2223

93.92193 927

91 6119| 617

7.5l41.5|4

206.843206.843

l93.575l93.575

l6.547ı6 547

2425 58J.59J {6.6E7

İ

?"irc\

a

a

.a

59

506.tOı

BANK MELLAT, MERI(EZİ: TAHRAN_İRAN İSTANBUL TÜRKiYE MER]<EZ,ANKARA \T iZMİR ŞUBELERİ

3l ARALIK 2020 TARiHİ İrİnaRıwı, KONSOLİDE OLMAYANFiNANSAL TABLoLARA iıişxix AçlKLAMA vr nipxoııan(Tutallar aksi bclirtilmedikçe Bin Türk Lirasl ("TL") olaİak ifadc edilmiştir.)

INFORMATİON RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (Continued)

x. EXPLANATIONS ON RISK MANAGEMENT (Continued)

,, Differences and matching between asset and liabilities' carrying vaIues in financial statem€ntsand risk amounts in capital adequacy calculation

*!.ö

co.rying ,alı.es oJ iı.ms in acco?danca vilh TıırıaishAccounıing sıandards

3ı Iı...ob.r 2020Aalaıacırh .nd cash EquivalentsFinmci.l A§§e§ at Fai, value Tkough Pİofitor lrssFinancial Assets at Fai. value th,ough odıercompİeh€nsivc Income

Financial Asscts measured aı Amonised costDeriv8tive Financial Asset§

Non-P€rformin8 Finacial Assets

Expected Loss ProvisionlrıDr (N.t)Lanslaose R.crbabbsFactofing ReceiyablasNon-Perforrning LrrısSpecıİc Plovisions ()Nonüuİf€nt Assets or Disposal Groups "Heldfoİ sale" and "Hotd fiom Discontinuedop€İaıionj' (n€t)

Equity Invesğn.nısT8ngible Asseı§ (neı)

Intıngibl€ Asset§ (net)

Invesİn€nt Prcpeo (n€t)

Curreot Taİ As§€tDeferrcd Trx Assetother AssçtsTotıl AlsatsLi.biliti..Deposi§D€rivaıive FnaDcial Liülliıies Held fo.

Trıdinglnterban* Money Mark€tssecuritics lssued

coıoıng

Jİnancıolgıdıaınarııs

P?.w.d aıpel TAs

Subjecı ıocounlefpolıy

,ı.bjacl ıocıadiı,is}

subj.cııo

,rıorteı,ısl(

caPital ıİablıiır

İrom caıirol

1.079.033 1.079,033

3t9

l44.225l4l,538

l44.225l41.538

6.0825,395

E.0825.395

l0 8l9l93

l0 8ı9l93

1.0l41.262

l 136.935|.162

1.235.12t

1.0ı4

1-2o1

729.937129.93,7

Fu.ĞFinsncial Liabiliti€s at Fıiı v8İ[ıe tlıroughpıofit oa LossD.rivative ftnanciol ıiabilitiesFactoring liabilırie§Lesse liabilitiesPİovision5cuİrent tax liabilityDefened t x liüilityLiabilities for Assets Held fo. sa]e and As§ets

of Discontinued op€rationssubordinat d Debt

other Liabilitiesshüeholders' Equity

l 1.2E9|.192

l1.289| 192

4,35

'ı'otı| Liabilities

189

4.3534t9.564

ı.236.935

a

ı 1ı (\

389

BANK MELLAT, MERKEZİ: TAHRAN_iRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE iZMiR ŞUBELERİ

31 ARALIK 2020 TARİHİ İrİnaRryıa KoNsoLİDE OLMAYANFİNANSAL TABLOLARA iı,İŞxix AÇIKLAMA VE DiPNOTLARTutarlaı aksi bclirtilmedik Bin Türk Lirasl ("TL olaıak ifade edilmi

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANcH (continu€d)

X. EXPLANAT|ONS ON RISK MANAGEMENT (Continued)

2. Difference§ and mıtching betwe€n a§§et and liabilities' carrying values in financialand risk amounts in capital adequacy calculation (continued):

§tatement§

J6|:

',r, o

8 a

carryınt volaes orııcrrü ı, rcordarıc. vııh Tu.liİhAccoırııirlg sıqrıdard,

3ı D.ccmbcr 20ı9A3iatscısh and Cash EquivalentsFinan§ial Assels at Fai, value Thtough Profit o.LossFinmcial As§els at Fai valua üİough oüercompİeh€nsiv€ IncomeFinancial Ass€ts measur€d sı Amoİtised costDerivative Financial AssetsNon-Performing Finaİrcial A§§ets

ExPcted Loss PıovisionLoırs (N.t)LoanİL2ase ReceivablesFııc ıor i n g Re ce iva b lı sNon-Pelfolming LrlısSpecifc Pfovisions ()Non-current Assels o, Disposal croups "Heldfor sale" and "Held from Disc!ııtinue-doperations" (net)

Equity Inv.slrnen§Tantible Assel§ (nel)

lntangible Ass€ls (net)

lnvesknent Property (n€t)

current Taı A55€lD€ferred Tax Assetother AssetsTotal A3§etsLirbiliticaD€positsDerivative Financial Liabi|ities HeId forT.adingInterbank Money Maİketss€curities IssuedFundsFinancial Liabilities ü Fair vaıu€ through Profilor lossDerivative fi nancial liabilitiesFocloİing li8bilitiesLeas€ liabilitie§provision§

cunenı tax liabilityD€ferred tax liabilityr-iahilities for Assets Held for sale and Assetsof Discontinucd Op€ration5subordinated Debtother Liabi!iıiesshafeholders'EquityTotıl Liıbilitica

caıryin8

1ınancial

p?aPored ospe? TAS

Subjecı ıoc.ediı lisl

counıerpaıv§ubjecı ıocrcdiı tisk

Subjecı

,is*

capiıd liolilioof d.ducıad

İfom capırol

931.022 l48 773 788,040

4l4 41.1

11.99769,262

J.768

5,l643.567

3.I526l5

l1.0lll9l

l 1,0I ll9l

9l6 9l6

4401.023.J90

440239324

J49.496

9.4433,184

94/33.184

24,1

2.4?945t.E38

ı.023390

f,lı"

!

7]J9;69.262

üü;4.182

BANK MELLAT, MERKEZİ: TAHRAN-İRAN iSTANBUL TÜRKİYE MERI(EZ,ANKARA VE iZMiR şUBELERi

3l ARALIK 2020 TARİHİ İrİnanryr,a KoNsoLiDE OLMAYANFİNANSAL TABLOLARA İıiŞxİx AÇIKLAMA vB nİpııorı-a,n(Tutarlaİ aksi belirtilmedikçc Bi. Tiirk Lirast ("'rL") olaİak ifad€ edilmiştir.)

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (continued)

x. EXPLANATIONS ON RlSK MANAGEMENT (Continued)

3. Main sources of differenc€s betw€en regulalory €xposure amounts and carrying values infinancial sıatements:

3l D.ccmb€r 2020l - Caİrying value of Assets in Accordğnce\ıith TAs (as per t4ınplate lB)2- c8İrying valıre ofLiabiliıi€s in Ac.o.danctwith TAs (as peİ ternPlate ı B)3- Totsl net aınount4. off-balanc€ she€t amoüıts5- Differencas in vıluations6- Diff€rences due ıo different nefiing rules(olheİ üanthos€ already inaluded in mw 2)7- Diffarences du€ lo consideration ofprovisions8- Differ€nces due to prudential filters9- RfukAmount

Totıl

|.236,619

ıaam!rubj.cı

ıo cradiıri!k

frımawork

Iıams.übjact to

sacuritisıtionfıımawork

ıt.m3§ubj..ı ıo

cou6tarparty

cr.dıt ri§kfrımawork

| 235 728

l,236.6194.869

|.235.7281.711

1.24ı.,aE L271.445

3t D.cGmber 20ı9('lı- Carrying value of Asseıs in Accordancewiü TAs (as per template lB)2- carrying value of Liabilitics in Ac.ordanc€with TAs (as peİ lEmpıar€ lB)J. Total net amount4- off-balance sheeı afiıounts5- Differencts in valırations6- Difrerencrs duc ıo different netting rules(oüer üanüose alrcady included in row 2)7- Differcnces due to coı§ideraıion ofprovisionst- Differenc.s due to prüdential filters9- Risk Amouıa

Totıl

1,023,390

Itcmssubj.ct

to arcditri§k

k

lt.mssub.iect to

secüritisıtion

ıt mğsubj.cı to

counıarpırty

cr.diı rilkfrımawork

Ittmssübjcct ıo

mırkel riskfrım€work

1,023.3901.198

1.022.2t3813

1.023.956 t.023.156(.) ıt. Prior P.riod hG b.o fur8üiad.

İ

4rııC\

i

lı.m§§ubj.ct to

mırkct ri§kframawork

l.tJ22.283

62

BANK MELLAT, MERKEZİ: TAHRAN_İRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE iZMİR ŞUBELERİ

3l ARALIK 2020 TARiHi irİsaRlyl-ı KONSOLİDE OLMAYANFiNANsAL TABLoLARA iı,işxiN AçIKLAMA vB nipxorı-a.n(TutaIlar aksi belirtilmedi kçe Bin Tü.k Lirası ("TL") olaıak ifade edilmiştir.)

INFORMATION RİLATED TO FİNANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (Continued)

x. EXPLANATIONS oN RISK MANAGEMENT (Continued)

b. General qualitatiy€ information on credit risk

l. How the business model translates into the components ofthe Branch's credit risk profile

The business model of the Branch basically consists of two main business fields: collecting funds by meansof demand curent account§, scaftered customeI time deposit accouns, especially with Bank Melllat lran andother foreign Iranian banks repo accounts subject to the interest-free banking rules, and using üose funds andequity funds to make funds available to customers. Because ofthese main business fields, the branch's assetshave a low credit-weighted strucfure. Reflecting this business model, its totaI assets consist mainly ofgovemment bonds and domestic maıketable bond securiıies, while the loans provided to customers remain insmall proportions. The branch ainrs to increase the loan amount, taking into account üe risk-retum balance,and thus to achieve a sustainable growth.

The risk profile of the Branch indıcates the types ofrisks to which it is exposed or exPects to be exposed, andis risk level by type ofrisk. The largest type of risk to which the Branch is exposed or expects to be exposedwithin its current and target business model is not the SME or commercial customer credit risk. Although ıhecredits remain in the active ratios. the sectoral concentralion and maturity strucfuIe are followed in the scopeof the risk of concentration. Conversion rates and limitations are followed for exposure risk. Intrinsic |imitshave been set fol borrowers and credit risk groups in terms of credit risk intensiıies, taking into accounı thecoherent size orders. country limits have been established in order to prevent concentration in the countriesdeterrnined within the scope of the country risk. Although it is a branch stafus and ownership structure isnatural|y higher country risk is Iran, it is considered to include a ıeasonably low risk. ln legal reporting, risksin lİan and other countries are monitored in accordance with BRsA regulations.

2. criteria and approach used for delining credit risk policy and for s€tting credit risk limits:

The main purpose of the credit risk policy is ıo measure the counterparty risk undertaken as part of a credittransaction, to monitor the risk against the legal limits and üe Branch's intemal limits, to research newtechniques and applications for measuring and controlling üe risk, to monitor oveıdue receivables, to analyzeıhe reason of overdue, aııd to take measures to pr€vent such reasons from repeating. The term 'credit risk'refers to üe potential loss the branch might be exposed to because of credit boıTowers' paltial or full defauhof the credit agİeements üey signed with the branch. This term also includes the loss of market valuebecause of üe breakdown of üe counterparty's financial position. This term includes on-balance sheet andoff-balance sheet transactions too.

Risk limits; as part of the risk aPpetite strucfure, are determined by considering the size of üe branch in üecaPital strucfure and üe fınancial system. In this context üe appetite for risk approved by the Board ofManagers are divided between and allocated to other |evels considered necessary by type of risk. The uses ofthe limis are closely monitoıed, and overdrafts are reported to the executive management foI ensuring thenecessary measures to be taken.

ı

aıgıG\

aıt

63

BANK MELLAT, MERKEZi: TAHRAN-İRAN iSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMİR ŞUBELERİ

31 ARALIK 2020 TARİHi İrinı.nryı.a KoNsoLiDE OLMAYANFİNANsAL TABLoLARA iıişriN AçIKLAMA vn nipxoıı.ıR(Tutaİlaİ aksi belirtilmedikçe Bin Türk Lirdst ("TL") olaİak ifadc cdilm iştir,)

İNFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (Continued)

X. EXPLANATIONS ON RISK MANAGEMENT (Continued)

b. Genera| qualitative information on credit risk (Continued)

3. sıructure and organization ofthe credit risk management and control function

Risk Management. by Intemal Control - Compliance and Intemal Audit Units. works under the AuditCommittee is affiliated to the Board of Managers. Risk Management Unit to which it is afTiliated areresponsible for impIementing the strategies and policies approved by the Branch Management Boardand for carrying out other duties assigned by the lntemal systems Supervisor performing the Auditcommittee mission.

4. Relations b€trY€en the credit risk managemeDt, risk control, complianc€ and iDternal auditfunction§

The units within the scope of the intemal systems were established in accordance with the Board ofManagers within th€ braııch organization strucfuIe. The board of managers has delegated its duties andresponsibilities within intemal systems to the Audit Committee. which is designated as Intemal SystemsResponsible. These units carry oui their activities under the supervision of the lntemal SystemsSupervisor.

The internal connol function of üe Branch is performed by ıhe lnternal control Dgpaltnent. lntemalcontrol System has been founded in such a manner to be capable and efficienı to mitigate, manage,monitor and control the exposure risks of the Branch in accordance with üe Branch's organiztionalstrucfure and business fields as well as changing circumstances, and covers all domestic andintemational branches, head ofTice, consolidated subsidiaries and all business activities of the Branch.The internal control system and intema| control activities of the Branch are designed by the Intemalcontrol DePartment in cooperation with the relevant management executives and are performed at asufficient and efıcient extent.

Compliance checks are carried out within lhe Intemal Control Unit in accordance with the legislation inaccordance with the structure ofthe Branch efforts are being made to ensure that the risk of conrpliancein the branch is effectively managed and controlled, that such risks are identified and prevented beforethey occur, and that the activities of the Branch are carried out in accordance with the releyantlegis|ation and regulations in a continuous manner.

Risk Management Department performs üe tasks of determining, measuring and managing üeexposure risks of the branch. An efficient risk management system infrastrucfure has been establishedfor cledit risk management tasks, credit policy, and risk management activities falling within the creditrisk policy. The intemal cledit risk limits set by the Board of Managers are measured and reported atregular intervals to the Audit committee.

Intemal audit depaİtrıent is in charge ofassuring üe Boaıd of Managers and üe executive managementthat the Branch's business activities are performed in accordance with the Banking Law, otherapplicable laws and regulations and üe internal stIategies, policies, principles and targets ofthe branch,and that the intemal connol and risk management sy§tems ale effiçitnt and sufficient.

aı11(\

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64

BANK MELLAT, MERKEZİ: TAHRAN-iRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMiR ŞUBELERİ

3l ARALIK 2020 TARiHi İrİna,Rryıı KoNsoLiDE OLMAYANFİNANsAL TABLoLARA iıiş«ix AçIKLAMA vr »ipNorı-aR(Tutaİlal ak§i belinilmedikçe Bin Turk Lirası ("TL") olaıak ifade edi lmiştir,)

INFORMATİON RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (Continued)


b. General qualilative i[formation on credit risk (Continued)

5. scope and main content of the reportiDg on credit risk exposure and on the crcdit riskmanagem€nt function to the executive matragement and to th€ Board of Managers

Risks exposed to the Branch are reported on üe basis of risk types in daily / monthly aııd periodic regularreports provided to the Board of Managers and senior management. Credit risk reporting includes thefollowing main content.

The asset quality is analyzed and compared to üe previous period in the framework ofthe Regulation on thehocedures and Principles for the Determinalion of üe Qualifications of Loans and Oüer Receivables byBanks and üe kovisions to be subscribed and üus üe sustainability ofthe asset quality is monitored. Creditrisk limits and realizations in üe related period. Loarı disbursements are monitored on the basis of cash, non-cash and total loans. Risk limits and realizations aıe defined for the risk appetite ofthe Brarıch.

Distribution of cash loans according to cash flows is monitored. Administsative arıd legal follow-upcustomer§ are monitored as well. ln addition, the limits and limits of the Branch Risk Group are beingrePorted.

country ratings, Iimits and limit achievements are b€ing followed and compared with the previous period.

In ordeİ to observe whether there is an increase or decrease in üe value of the real estate collateral acquiredduring the fund disbursement process, the analysis ofthe real estate price index is examined and üe appraisalvalues aıe updated routinely and aı necessary intervals.

credit quality of a§§ets

Gro§s csrrying vılue as per TASAllowınces/

ımortisıtion ındimpairments

5.395

848

3l December 2020

l Loans

2 Debt §ecuritiesoff-baıance sheeı expo§urç§3e)

4 Totıl

Defıult€d8.082

Non-dcfıultedl41.538

1.237

Net vılucsl44.225

389

1908.812

4.7|ll47.4E6

3l66.559

5.185l49.7y,

(.) Non-indemnified cash non-cash |oans are included

Gross carrying vılue es per TAsAlloıvınce§/

ımortisıtion andimpairme nts

4.182

823

Jl Decemb€r 2019

l Loans

2 Debt securitiesoff-balance sheet expoŞu.es

3 (*)

4 Total

Defıulted8.3l6

Non-defaulted69.262

1.237

Net vılucs73,396

4l4

6338.949

8l87l3l1

2535.258

1.198,75.008

(.) Non-indemnificd cash non-cash loans are included r?cA

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BANK MELLAT, MERKEZi: TAHRAN-iRAN İSTANBUL TtIRKİYE MERKEZ,ANKARA VE iZMİR ŞUBELERi

3l ARALIK 2020 TARİHİ İrina.Rryr.ı KoNsoLİDE OLMAYANFiNANsAL TABLoLARA iıişxiN AçIKLAMA vB nipNorı.q,n(TutaJlaİ aksi belirtilmedikçe Bin Türk Lirası ("TL") olaıak ifade edilmiştir.)

x


EXPLANATIONS ON RİSK MANAGEMENT (Continued)

Changes in stock ofdefaulted loan§ and debt s€curities

l2

3

4

56

Defaultcd loans ajıd debt securities at end ofthe previous reporting pe.iodLoans and dcbt securities that have defaulted since the last reponin8 periodReceivables back to non-defaulted stafusAmounts written offother changesDCfıultcd lo.n§ snd dcbt §.curities 9t.nd ofthc raDorting period (l+2-3_4*5)

currcnt pcriod

e)8,949

(77)8.872

(*) Non-indettmined cash nontash ıoans are inclüded.

t

2

4

5

6

Defaulted loans and debt securities at eod ofüe previous rcporting periodLoans and debt securities that havğ defaulted since tho last reponing periodReceivables back to non-defaulıed stafusAmounts wrinen offother changesDefıulted losns ınd debt §ccuritia§ ıt end ofthe reporting pcriod (ı+2-3_4+5)

(63)8.949

(,)

6.

a)

Non-indcnınified cash non-cash loaııs are included

Quaıitaıive disclosures related to the cr€dit quality of assets

Scope and definition§ of "overdue" and "provision allocaled" receivables for 8ccounting purpo§€sand the difference§ of deİİnitions between "overdue" and "provision allocated", if any.

Overdue receivables and provision allocated receivables aıe determined according to the Communiqueon Principles and Procedures for the Determination of üe Quality of Loans and Oüer Receivables andR€serves.

b) Th€ part ofthe overdue receivables (past 90 day§) for which provision is not ııIocıted and reasonsfor thıs ıpplication

Provisions are made on time and at the required lates within the scope of the legislation. within thebranch capital strucfure, the amount of credits required ıo allocate both loans and special provisions ingeneral is very low.

c) D€linitions ofthe m€thods u§ed wh€n determining the provision amount

The minimum legal reserve requirement ratios stated in the same 7th and 8th alticles of üe Regulationon loans or other receivables classified in the third, founh, fifth group defined in Anicle 4 of the

Regulation on the P.ocedures and Principles for the Deıermination of the Qualifications of Loans andOther Receivables and the PIovisions to be Forbidden by Banks, lncluding the minimum lega|

guarantees defined in Articles 9 and l0.

.a'.ıa

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66

Prior Pcriod (*)

9.0|2

BANK MELLAT, MERKEZİ: TAHRAN-İRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMİR ŞUBELERi

3ı ARALIK 2020 TARİHİ İrİnanryıe KoNsoLİDE OLMAYANFİNANSAL TABLoLARA irişriN AçIKLAMA vE DipNoTLAR(Tutaİlaİ aksi belirtilmedikçe Bin Tü.k Lirasü ("TL") olarak ifadc edilmiştir

X.

INFORMATION RELATED TO FINANCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (continued)

EXPLANATIONS oN RISK MANAGEMENT (continu€d)

6. Qualitative disclosures related to the credit quality ofas§ets (Continued)

d) Delİnitions of restructured receivable§

According to the Principles and Proceduıes for the Determination of üe Quality of Loans and OtherReceivables and Reserves, restrııcfuring for the performing and non-performing loans means newcontracfuIal conditions only for the |oan obligators encountered or likely to be encountered inrepayment a5 a lesult offmancial difRculties, excluding loan obligators wiü no repayment difficulti€s.

e) Breakdown ofexposure§ by geogr8phical ar€as, industry aıtd aging

(') Non-cash loan amounts üat have not been compcnsated for aIe included in üe non_performing İoan amounl

f) Credit ri§k mitigation techniques:

ln accordance with Article 33 of the Communique on Cıedit Risk Reduction Techniques, üe Branchıeduces üe credit risk according to the simple financial guaıantee method in which the risk reductioneffects are calculated based on the fair value determined in accordance with Article 19 of theCommuniqud on financial guarantees. ln üe credit risk reduction calculations, no tools oüer than cashor 5imilar assels are considered.Financial collateral can noı be used for crediı reduction ifthe remaining matuıity ofüe collateral is lessthan the remaining mafurity (maturity mismatch) and / or cuİrency incompatibility ofreceivables.

cu.İCıt P.riod (')Noİ-

pc.forming sp..i.lLoıo! Provirion writa-off!8.872 5.395

Prior P.riod (')Noa-

p€rfoİmingLoın38.949

sp.ciılprovi§ioa

4.182§'rite-offs

Totıl E.E72 5..395 8.9,19 .ı.l82

Jl December 2020

Erpo§üresun§ccured:

cırryingımount ıs

per TAs

collııarı|iradımotrnı of

Etposurcs exposura§sccured by sccurcd bycollaterıl col|ııcrıl

collııaııliz.dımount of

f,lpo§uras eİposure§sccured by secur.d bylinınciıl linınciıl

güırıatets guırıntaes

collıt.rıliz.damount of

Expoaurc! cIpolurass.curad by sacurtd by

crcdit craditdcrivıtiva! d.rivaıiva!

! Loans2 Debt securities3 Totıl4 overdue

|44.M4389

l4{.4338.082

IİI l8l

l8l l8l

f,xposurasunsecuradl

cırryingamouDt ıs

per TAs71.659

41412.0138.3l6

collıtarslizedımouot of

f,xp8ura§ aIposurcs3.cur.d by s.cür.d bycollılcrıl collıt.rıl

l]8 l38

collıt.rılizedımouirt of

Eıposuae§ aıpo§urai§ccurtd by §acuacd bylinınciıl finaıtciıl

guırınt€a§ guaranıeas

Coll.ı.rılizedımount of

f,tpdures axposurassacüred by s.cur.d by

arcdil crcditderivıtiv.§ d.rivıtiv.§

lJtlJ8

Jl Dec€mbcr 2019l l,oans2 Debt securities3 Totıl4 overdue

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BANK MELLAT, MERKEZİ: TAHRAN_iRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMİR ŞUBELERİ

31 ARALIK 2020 TARiHi irinanryı,ı KoNsoLiDE oLMAyANnixaxsaı- TABLoLARA iı-iş«iN AçlKLAMA vB nipxorııR(Tuta.lar aksi belirtilmedikçe Bin Tü.k Lirası ("TL") olaİak ifadc €dilmişlir.)

INFORMATION RELATED TO FINA}İCIAL STRUCTURE AND RISK MANAGEMENT OF THEBRANCH (Continued)


c. lnformation on counterparty credit ri§k (CCR)

l. Counterpırty credit risk (CCR) approach analysis

None.

2. Capital requirement for credit vıluıtion ıdjustınent (CVA)

None.

3. stındard Approıch - ccR €xposures by risk class ınd risk weights

3ı Dec€mber 2020

ıl

l92l45 l 0l4Re.inbl.ı fioh ccnEıl8o!tım.dr ed

Rtcciv.bI.5 f.oh Eğimd od lc.l gov@c.ıR.c.inb|.5 frch.dminilt tirc bodiB ed non-

R.c.isbl.s from multilıtrd d.rcloPm.nı

R..iioblci ton int rnıioid or8oiztioBRgiııbl6 too b.!k ..d üioığıg. ho!.ciRcirıbı.l aoo .d!o..ı.

Rciv.bl.§ §u.d by rc§id.atid FoP.rtyRe.ivıbl., ,ccu.!d by conn@iıl proFltyNoGp.rforning İ!c.iv.bl.§R4ivıbl.. i. h|gi-n5t c.!.gdi6Mongıt.-bakd $cğiti.sshdl l.m rceinbl.! lo bDls. lrokmg.

l,v..ım.ntl .i0ilr ıo 6ll.cıiv. inEtn.nt

Eqüty ihe i.v.İn.nt!

a

7

]

,10] l23o! 62ll0l12

l0o

l0lll2l]

l5l6l7l,

44a 573ıoJ.lı' ı.lra ı9a

]8912274

2@,a7,

]8ç

1.711.15a

3l D€cember 20l9

Recivıbl.ı am mtd totfuoi, üd

R@inbl6 toD c8i6d ed le.l $ffitR@inbl.! tom ıdhiıilr.tiE bodi.i rd.o.-

R.c.inble toD nultil.ı..d .kEloPn nı bilkR.eiEbl6 aoh in..dtiond or8üiztionR.c.i9ıblc, t,om b.ı}, sd t oıd8e [email protected]ıblğ tom corpont

R.c.i!ıbı.. i.cü..d by ,.lidğıt'ıd P.oP.ttyReivıbı.. i.cuİ.d by @M.rtid FopcttyNo.-P.rfoffiin8 ı@ir.bldReinhId i! hishrisr .&tdiğModg.g.iak d criıi6süon l.m teitrbld to b.d!, tio}as. hoc*.

I!E.t!ıoi! linilğ to @l|Etitt inv.irdl

Eqüty üıı! iıvtrttEnB

a

ı33 57]

4ox 6171|

9l'ıl76ra

21

5

6

t9loltlzl]ıa

l5

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BANK MELLAT, MERJ(EZ|: TAHRAN-iRAN İsrı,xsLı, TÜRKiYE MERKEZ,ANKARA \T iZMİR şUBELERi

3ı ARALIK 2020 TARiHi irin.c,Rlyıı xoNsoı-ion oLMAyANriNexsı,ı TABLoLARA iıişrix AçIKLAMA vo oipxoııan(Tuıallar aksi belirtilmedikçe Bin Tü.k Li.ası ("TL") olarak ifade edilmiştir.)

x

INFORMATİON RELATED TO FlNANCIAL STRUCTURE AND RİSK MANAGEMENT OF THEBRANcH (continu€d)

ExPLANATloNs oN RISK MANAGEMENT (contirlu€d)

c. lnformation on couDtcrparty credit risk (ccR) (continued)

4. Qualitative explanations on market risk

The Branch defüııes market risk as market prices and changes in maıket parameters such as interest,exchange rate and stocks as the value of assets in the resulting trading accounıs. The defuıitions of riskfactols constituting maıket risk and their specific issues are given below.

General Market Risk

It is the probability of loss that the branch may be exposed to due to interest late risk and stock positionrisk in the value ofpositions related to financial instruments included in trading accounts

lnterest Rate Risk

It is the probability of loss that the branch may be exposed to due to th€ movements in üe interest ratedepending on the position ofthe financial instrument§.The Branch does not actively purchase and sell financial instrumenıs, therefore, although it does nothave trading acçounts, it may be particularly affected by flucfuations in Turkish Lira interest rates dueto its securities portfolio available for sale. This risk is handled within the Interest Rate risk arising frombanking accounts. In addition, the bank's fixed term resource strucfure, the weighted matuity (duİation)and cost of this strucfure are taken into account in purchasing securities available for sale.

stock position Risk

lt is the probability of loss that the Branch may be exposed to due to movements in stock pricesdepending on the stock position position in the trading aÇcounts. The branch has a stock position belowlo^ ofthe equity and the valuation difference has been reflected in the records.

Currency Risk

It is the possibility of loss that the branch may be exposed to as a result ofchanges in foreign exchangerates due to al| foreign currency assets and liabilities.while determining the rules and limitatjons regarding the direction, amount and composition of theforeign cunency position of üe branch is in principle under lhe aulhority of the Board of Managers, ithas been transferred to the Risk committee by üe Boaıd ofManagers.Economic developments in Turkey and the world Risk Committee limits and restrictions on the foreignexchange position is evaluated at intervals deemed appropriat€ to make changes it deems appropriate.

Branch management prefers to hold a long position and maintain this position with equa| weight inUSD and EUR currencies, so üe bank carries cunency risk within the legal limits.

Spesific Risk

It is the probability of loss that may occur due to the problems üat may arise from the management andfırıancial strucfures of the organizations üat issue or guarantee the financial instruments that make upthese positions, except for the ordinary market moYem€nts, in üe positions related to the rınancia|instruments included in the trading accounts of the Branch. A|though the Bank mainly caıries aposition of treasury bills or governm ent bonds with ainstruments subject to specific risk, and these

69

igh1, it also rarely purchases fınanciald within the credii risk.

BAI\IK MELLAT, MERI(EZİ: TAHRAN-iRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMiR ŞUBELERİ

3l ARALIK 2020 TARiHİ İrİnaRryıa KoNsoLİDE OLMAYANFİNANsAL TABLoLARA iıişrix AçIKLAMA vE DipNoTLAR(Tutaİlaİ aksi bclinilmcdikçc Bin Türk Lirası ("'l'l-") olarak ifade edilmiştif .)

lNFORMATİON RELATED TO FINANCIAL STRUCTURE AND RJSK MANAGEMENT OF THEBRANCH (continued)

x. EXPLANATIONS oN RlsK MANAGEMENT (continued)

c. ınformation on counıerparty credit risk (CCR) (Continued)

4. QuaıitatiYe expıanations on markeı risk (continued)

Commodity Risk

ll is the probability of loss that the branch may be exposed to due to movements in commodity prices,depending on üe position ofthe commodity and commodity-based derivative financial insnumens. TheBranch does not hold a commodity and commodity-based derivative fınancial instrument position. [t isnot exposed to this type ofrisk.

Swap Risk

lt is the probability of loss that the bank will be exposed to due to the price changes of üe securiıies,foreign exchange or commodity subject to the tansaction due to the non-settlement of the settlemenıtransaction in transactions that involve üe delivery of a secuıity, foreign cunency or commodity at tlıeprice stipulat€d in the contract in a certain term and require the fulfillment of the obligations of boüpanies on the matuİity. The Branch does not buy or sell securities, foreign exchange or commoditiesdePending on a mafurity. It is not exposed to this type ofrisk.

Market risk under standardised a roach

Explanation on Operıtionıl Risk

The operational risk base amount is calculated according to the basic indicator method in accordancewith Arıicle l4 ofthe Regulation on Measuıement and Evaluation ofCapital Adequacy ofBanks.

Annual gross income is calculated as the sum ofthe net amounts of interest incomes and non-iniereslinconle afteı deducting the profit / loss arising fiom the sale ofmarketable securities that aıe availablefor sale and securities held to mafurity and the amounts compensated from extraordinary income andtnsurance.

cuııent ycır

B..i.lodi..ıor M.tbodOİoss IncomeV.lue at oDcr.tional Risk 0ota1.12.5)

3t.l2.20r? 3l.ı2.20ıtrt9.150 62.300

3ı.ı2,20ı9s6.26t

Totıy No. ofyca.! of

porativa Groaaı02573

Rıle (%)

15

Totılr5Jt6l92324

Direct (Pİe-paid) Productsl lnterest rate risk (genera| and specific)2 Equity risk (genera! and specific)3 Foreign exchange riska Commodity risk

option§5 Simplified approach6 Delta-plu§ method7 scenario apFoach8 sccuriti§ıtion9 Totıı 7.51.1 1-331

3l December 2020

7.5l4

3l7.483

Jl D€cembcr 20ı97ju

337.30l

Totılı5.,ı66

ı93575o1al* l2.5

otıy No. ofYcır§ of

Gro§s.2.ı0

§ic ındiC.ıor Mcthodross Income

ional RiskaIuc at

Jı.ı2.20l6 31.ı2.20l7 Rıt. (%)

ı541.07ı 19

|ııiQ\

pıior year

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BANK MELLAT, MERKEZİİ TAHRAN-iRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE iZMİR ŞUBELERİ

31 ARALIK 2020 TARİHİ İrİsaRlyl-a KoNsoLiDE OLMAYANFiNANSAL TABLOLARA iıİŞrİN AÇIKLAMA vB oİpNorı., ,n(Tutaılar aksi belirtilmedikçe Bin Türk Lirası ("TL") olarak ifade edilmi ştir.)

x.


ExPLANATloNs oN RlsK MANAGEMENT (continued)

Proiit-share rate risk related to banking book

Economic Yalue differences ırising from fluctu8tions in profit shıre rales in ıccordance with theregulation on meısur€m€nı and evİluation of profit shar€ rates derived from banking accountswith standard shock method

current period

cürraocyl. TL

Appıi.d shocl(+A b.rir point!)

(+) 500

c) 400(+) 200

G) 200(+) 200

G) 200

Gıinrı-o!s.!(2 ı67)

l884

Gıiıs/shıİ.hold.İ'! .qoity-ı,os!ca/3hı.choldGİ't.quity

a0,44,)o/a38

2. UsD

3. EUR (24.693'l( 1.47I )

4ıJ(25J50)

v45,02',

"/o(0,30)%(0,06)./.|s,46,

Toııl (For n€ıtiv. §hock)Totıl (For DoiitivC §hocks}

prior period

d

l

cllrrencylTL

Appli.d sho.k(+/. bırit point!)

(+) 500

t) 400(+) 200

G) 200(+) 2 )

G) 200

G.inrır$.!(564)

472

Gıini/sbır.hoıd.r'! .quity-ı.oıla.Atır.bold.İ'i aquity

./40,|2\o/a,|0

2, USD

], EUR {26-626')(89l )(4ı9)

(27.ı90)

o/45,78>o/40,|9')./.(0,09,./.(590}

.?o

{a2

4f*!aQ\,\.1l

Tot l (Foİ n€ıtivc shock!)Totıl (For positiv. rhockr)

BANK MELLAT, MERKEZi: TAHRAN-iRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE iZMİR ŞUBELERİ

3l ARALIK 2020 TARİHİ İrİnaRryıa KoNSoLiDE OLMAYANFİNANSAL TABLOLARA iı,İŞrİx AÇIKLAMA VE DİPNOTLAR(Tutaİlaf aksi belinilmedikçe Bin Türk Lirası ("TL") olaıak ifade edilmiştir.)

İNFORMATION RELATED TO FINANCIAL STRUCTI,RE AND RISK MANACEMENT OF THEBRANcH (continued)

X. EXPLANATIONS ON RlSK MANAGEMENT (Continued)

e, Hierarchy of valuıtion techniques which eslablishes basis for fair yalue calculation of tinancia|a§seıs and Iiabilities

Level l: Quoted prices in active markets for identical assets and liabilities

Leve| 2: Inputs oüer üan quoted prices included within Level l üat are observable maık€t infoımation forthe assets or liability, either directly oı indirectty.

Level 3: lnputs for the asset or liability that is not based on observable maıket information.

According to the classification principles, the fair value classification ofthe financial assets and liabilities forwhich the Branch is carrying at fair value is as follows:

l D€c€mber 2020 Lcvel l

389

Level2 LevelJ Tot8ı

389in.nciıl Asset§ ıt Fıir vıluç Through Prorit or Los§Governmen( l)ebt securitiessha.e certificatesother Financial AssctsFinıncııl A§§et§ ıt Fıir vsıuc Through otherComprehcnsivc lncomcGovemmcnt Dcbı sccuritiesshaıc ccrtificatesother Financial Assetsotal Asset!

389 389

389 J89

vative ftnancial liabilities held foİ tradingunds Borrowcd

vative financial liabilities for hedgin8 pu.poses

otrl Liıbilities

l Dec€mber 20ı9 Level l

4|4

414

Level2 LevelJ

nınci.l As§et§ at Fıir Vılue Through Prolit or Losscovemment Debt securitiesshaıe certificatcsOthcr Finançial AssetsFinınciıl Assct§ ıt Fıir vıluc Throu8h othcrcomprchCnrivc ıncom.

Govemment Debt securiticsOüer Financial Asses

otılA5s€ts 4l4

rivative financiaI liabilities held for tradingvative financial liabilities for hedging purposes

otal Liabilitics.)

Iı2

fı"ıG\

Totıl

4l4

4l4

4l4

,l2

SECTION FIVE

EXPLANATIONS AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENT§

EXPLANATIONS AND NOTES RELATED TO ASSETS

a. lnformation related to cash and the account of th€ central Bank of the Republic of Turkey (the

"CBRT)

l. [nformation related to cash and the account ofCBRT

2. lnformation related to lhe account ofüe CBRT

CashThe CBRTOüerTotıl

3l Dcccmber 2020TP YP

2.194 446.329

l84.584

3l Dec.mb.r 20ı9TP YP

16.224 284.936

l79.159

186.178 446.329 195.383 284.936

Demand unrestricted AccountTime Un-restricted AccountReserve Requirement (ı)

Totıl

3ı Dccember 2020TP YP

43.890

3ı Decembcr 20ı9TP YP

99.424

|40.694l84.584

(ı) Accolding ıo ıhe CBRT co espondence dated 7 Augusı 2018, trıı rcİene rcquiremarrt Jol füeign cufren y liabiliıieİ arcestabliİhed in TL with the fesene rcquiremenı Jol TL lıobiliıies cıa'siİed undel "Resene RequieDent".

3. Information on İeserve requirements:

b. Information on financial assets at fair value throu rofit or lossh

Pl€dged / Btocked linanciaı a§§€t§ at fair vaıue through profit or ıo§§

As ofDecember 31't,2020: None. (3l December 20l9: None.)

Financial assets at fair Yalue through profit or loss subject to rep

As of December 3l ", 2020: None. (3 l December 20l9: None.)

lnformation about derivative instruments held for tradi

As ofDecember 3l't,2020: None. (3l December 20l9: None]

73

3l Dccember 2020

389

38;

3ı Dec.mbcr 20ı9

4|4

4;otal

vemment Debt securitiesuritics Rcpresenting Share in Capital

F'inancial Assets

l

C'E ı Q\

t

t.a

urchase agreements

l.

BANK MELLAT, MERKEZİ: TAHRAN-İRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMiR ŞIJBELERİ

3l ARALIK 2020 TARiHi iriııRryı-a KoNsoLİDE OLMAYANFİNANSAL TABLOLARA iı-iŞriN AÇIKLAMA VE DiPNOTLAR(Tuıarlaİ aİsi belirrilmedikçe Bin Türk Lirasl ("Tl.") olarak lfade edilmiştir,)

The reserve rates for TL liabiliti€s vary between l7o and 6% for TL deposits and oüer liabilities according totheir matuıities as of 3l December 2020 (3l December 2019 1o/o arıd 1Vo for a|| TL liabiliıies). The reserverates for foıeign currency liabilities vary between 5o/o aııd 2|o/o for deposit and oüer foreign cunencyliabilities according to üeir mafurities as of 3 t December 2020 (3l Decembeı 20l9: %5 ile %2l ) Accoıdingto üe CBRT correspondence dated 7 August 2018, as of the reserve requiıement period dated l0 August20l8, the reserve ıequirement for foreign cunency liabilities are established in TL. Wiüin the scope ofüereserve facility, the reserve requirements for FC liabilities are calculated at a maIgin of l0% wiü üe USdollar foreign exchange buying Iates announced in the official Gazette on üe date of calculating üe TLequivalent liabilities.

,79.,135

ı79. ı59

BANK MELLAT, MERKEZİ: TAHRAN-iRAN İSTANBUL TtJRKİYE MERKEZ,ANKARA VE iZMiR şUBELERi

3l ARALIK 2020 TARiHİ İrİnanryr-a KoNsoLiDE OLMAYANFiNANSAL TABLoLARA iı-işxiı AçIKLAMA vE DipNoTLAR(Tutarlaİ aksi belirtilmedikçe Bin Türk Lirasl ("TL") olaİak ifade edilmiştir.)

3l December 2020TL Fc

BanksDomesticForeignHcad Quaners and Branches Abroad

Totıı

358.555 39.0,12

4,1.44,7

85l87J70

]67-]86 31.28051.407

629893l6

l358.556

l367.387

2. lnformation on foıeign banks account

unrc§tricıedAmount

3l Dcccınbcr 202046.141

Restricted AmountJl December 2020

unre§trictcdAmount

Jl December 20ı956.88l

Restricted Amount3l Decembeİ 2019

68 50

1.49048.299

1.10658.037

(ıJ oEcD countlies except EU counbies, UsA and Canada

lnformation on financiıl ıssets at fıir vııue through other comprehensive income:

As of 3l Decembe, 2020 there are no financial assets whose fair value difference is reflected in othercomprehensive income, subject to repo transactions (3l December 20l9: None)..

As of 3l December 2020 there are no financial assets whose fair value difference is reflected in othercomprehensive income, subject to ıepo transactions (3 l Decemb€r 2019: None).

There are no financial assets at fat value through oüer comprehensive income.(3l Decembeı 20l9: None).

e. lnformation on loans

l. Information on all types of loans and advances given to shareholders and employees ofthe Branch:

d

2

a

ı I

i E ı i\

rcct Loans Granted to Braoch's shareholder§corporate shareholdersReal peıson shaıeholders

dir.ct Loans Gr.nted to Brınch's shırehold.rs

otalıns cranted to Branch's Employ€€s

3l Decemhcr 2020Cı§h Non-crsh

3l Deccmber 2019cısh Non-cısh

6J86]8

1

l.

EXPLANATIONS AİID NOTES RELATED TO UNCONSOLIDATED FINANC|AL STATEMENTS(continued)

EXPLANATIONS AND NOTES RELATED TO ASSETS (Continued)

c. Information on Banks

l. lnformatlon on banks and oüer financial instifutions

3ı Dec.mbcr 20ı9TL Fc

Eu countriesU§A CaıadaOECD Countrieş (l)

off-shore Banking Regionsoücrrotıl

BANK MELLAT, MERKEZİ: TAHRAN-İRAN İSTANBUL TÜRIdYE MERKEZ,ANKARA VE İZMiR ŞUBELERİ

31 ARALIK 2020 TARiHi İrİn.ı,nryı,a KoNsoLİDE OLMAYANFİNANsAL TABLoLARA iıişrix AçIKLAMA vn »irxorr,an(Tutarla, aksi belirtilmed ikçe Bin Türk Lirası ("TL") olarak ifade edilmiştir.)

t. EXPLANATIONS AND NOTES RELATED TO ASSETS (Continued)

2 lnformation on üe first and second gloup loans, oüer receivables and loans that have been restnıcfuİedor rescheduled and oüer receivables:

cılh Loıo!

(]ı D.comb.İ 2020)

stınd.rdLoın§ ınd

othcrRaaaivıbla3

Loıns ınd other Receivıbles t'nd.r Clost }loİtitoring

Not in the scoPcofla§ıructing

Restrucled

chıngc§ incondition of th€

ıgrecmcnts Refinan(ing

Non-!pacializ.d Lo.na

wo*in8 capilal Loaİ§

Expon Lrans

Impori t ans

Loaııs to Finaıcial sectoa

consumer Loans

crcdit caıds

Others {|'

§paciılizııion ı.oana

oth.r R.ccivıbl.tToıı!

l41.5J8

1.280

140-258

l41.5J8

cısh ı-o.n§

(3l D.c.mb..20ı9)

stındırdLoına ınd

othCrRacaivıbles

Loın§ ınd othcİ Reccivıbl€s Under Clos. Moniıoring

Not in tba scopaofrestructing

Restrucled

ch.o8.! incondition of

th.agaaamant!

ı"on-spaciıl ized ı,oı n§ 69.211 l5

workine caDital t ans

Expo( Loans

lmpon Loans

Loaıs to Financial sccto.

consumet Loans 650

credit cards

Othcrs (|) 68.597

Speci3liZıtion Loın§other RcceivıbIc§

Totsl l5

(l) Discounl notcs aİe included that the balance.

3. Loans and other receivables with extended pa

l

t:,ı ç\

None (3l December 20l9: None)

,l5

EXPLANATİONS AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS(continued)

(l) Discount noıes aıe included üaı the balance

chınges incooditioo ofthe

ıgleaments

l5

69.z17

BANK MELLAT, MERKEZi: TAHRAN-İRAN İSTANBUL TÜRKiYE MERJ<EZ,ANKARA VE iZMiR ŞUBELERi

31 ARALIK 2020 TARiHİ irİnanır,ıa KoNsoLİDE OLMAYANFiNANSAL TABLOLARA İı.İŞxİx AÇIKLAMA vn nİpxoıııR(Tutarlar aksi belinilmedikçe Bin Türk Lirast ("TL") olaİak ifade edilmiştir.)

EXPLANATIONS AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS(Continued)


4. lnformation on consumeı loans, consumer credit cards, personıel loans and personıel çredit cards:

aı$

tı

ı December 2020 short-termLong and medium

term Totalon§umer Loans - TL

Housing loarısAutomotive loansGeneral Purpose Loansother

onsumer Loaos - Fc indcxcdHousing loansAutomotive loan§Gene.al Purpose Loaİısother

917 971

nsumer Loans - FCHousing loansAutomotive loansGeneral Purpose Loansother

on§umer Credit crrds -TLwith installmentwithout installment

onsumer credit cards - Fcwith installmentwithout installment

r§onnel Loın§ - TLHousing loansAutomotive loanscene.al Purpose Loansother

rsonnel Loans - FC indexedHousing loansAutomotive loan§General Purpose Loansother

J0l 30J

2 30l 303

nnel Loans-FCHousing loansAutomotive loansGeneral Purpose Loansothcr

rsonncl credit cards -TLwith instalimentwithout installmentnnel credit cards -Fc

with in§tallmentwithout installmentdraft-TL (RealPĞrson)

vcrdraft-Fc (Real Person)otal 30r 1.280

76 2|"?ıC\

L

BANK MELLAT, MERKEZİİ TAHRAN-iRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMİR ŞUBELERi

31 ARALIK 2020 TARiHİ irİn.Anryı,ı. KoNSoLiDE OLMAYANFiNANSAL TABLOLARA iıiŞxiN AÇIKLAMA VE DiPNOTLAR(Tutaİlaİ aksi belirtilmedikçe Bin Turk Lirası ("TL") olaİak ifad€ edilmiştir.)

EXPLANAT|ONS AND NOTES RELATED TO UNCONSOLIDATED FlNANCIAL STATEMENTS(Continued)

I. ExPLANATloNs AND NoTEs RELATED To AssETs (continued)

l December 20l9 Long ınd mediumtermshort-term Totıl

mer l-oans - TI-Housing loansAutomotive loansGencral Purposc LoansOüer

nsumer Loans - FC iıdexçdHousing loansAutomotivc loansGeneral Purpose LoansOther

l2 l2

Loaİıs - FCHousing loansAutomotive loaı§Gencral Purpos€ LoansOther

crcdit calds - TLwith installmentwiüout installment

credit cards - Fcwith insıallmentwithout insıallment

Loans - TL 6J8 6J8Hou§ing loansAuıomotive loansGeneral Pu.pose Loansother

638 638

el Loans - Fc indexedHousing loansAutomotivc loans

General Purpose Loansother

Loans-FCHousing loansAutomotive loa.ırs

General Purpose Loansother

el credit card§ - TLwith installmentwithout in§tallment

ersonncl crcdit cards - Fcwith installmentwithout in§tallmcnt

ve.d.aft-Tl (Rcal Person)verdrafl-FC (Real Person)otal 650 650

İ

Crııt\

aıo

,7,1

BANK MELLAT, MERJ(EZI: TAHRAN-İRAN iSTANBUL TÜRKiYE MERKEZ,ANKARA VE İzılin şunnı,rRİ

3l ARALIK 2020 TARiHi irİnınryıa KONSOLİDE OLMAYANFiNANsAL TABLoLARA iı,işrix AçIKLAMA vE DipNoTLAR(Tutaİlar ak§i belinilmed ikçe Bin Türk Lirası ("TL") olaİak ifade edilmiştir.)

EXPLANATİONS AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS(continued)

E)ÇLANATIONS AND NOTES RELATED TO ASSETS (Conıinued)

5. Information on commercial installment loans and credit cards

6. Loans to of borrowers

Distribution ofdomestic and foreign loans: Loans are cIassified according to the locations ofthecustomers

8. Loans granted to investınents in associates and su

None (3l December 2019: None).

78

,7

commerci.l Loıns withlnstıllmcnt Facility - TLBusiness Loarısvehiclc LoansGeneral Purpose LoansOthcrcommcrci.l l,o.ns withln§tıllment FıciIity - lndcxedto FcBusiness LoansVehicle I-oansGeneral Purpose Loansothercomm.rciıl Loın§ wiıhlnstıllment Fıcility - FcBusiness LoaJısvehicle LoansGeneral Purpose LoansOüercorporate credit c.rds - TLInstallmentNon - Installmentcorporıte credit cırds - FcIn§tallmcntNon - lnstallmentoverdraft Accounts - TL (LçgalEntities)ove.draft Açcounts - Fc (LegalEntities)Tot.l

l5 l5

ı5 l5

l5 l5

34.0,16 34.076

34,016 34,076

J,ı.076

TotalTotıl

34.076

3l December 2020Long and

short mcdiumTerm tarm

3l December2o2o

3l December20l9

PublicPrivale l41,538 69,262Total l,ı 1.5J8 69.262

48.0l693.522

ı41.538

3l December 20l9905

68.35769.262

3l D.cember 2020estic Loans

oreign Loansotal

t I

vc|:'

l.

3ı Deccmbe.20ı9Long ınd

shori mediumTerm tcrm

BANK MELLAT, MERKEZi: TAHRAN-iRAN isrexnur, TÜRKİYE MERKEZ,ANKARA VE İZMiR ŞUBELERi

3t ARALIK 2020 TARİHi irİnınryr,a KON§OLİDE OLMAYANFiNANsAL TABLoLARA iı,işrix AçIKLAMA vr nirxorr,ı,n(Tutaİlaİ aksi be|inilmedikçe Bin Türk Lirası ("TL") olaİak ifade edilmişti..)

EXPLANATIONS AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS(continu€d)


9. Special provisions for loans

3l December 2020 3l December 2019Loans and other receivables with limited collectabilityLoans and other.eccivables with doubtful collectabilityuncollectible loans and other receivablesTotıl

(5.395)(5.395)

(4.182)(4.ı82)

l0.

(D

(ii)

Information on non-perforrning loans §et)Information on loans and oüer receivables rescheduled or restructured from non-performing loans

Information on the movement oftotal non-performing loans

lII. GroupLoın§ ınd otherReceivıbles with

Limitedcollectıbility

lv. GroupLoens and otherReceivebles with

Doubtfulcollectebilİty

v. Group

(234)

8.0825,3952.681

Unco|lectible LoAnsınd other

Receivıb|es8.3l631 De.Cmber 2019

Additions (+)

Taaısfers fiom otheİ caı€gorie§ ofnon-performing loans (+)

Transfers to other categories of non-performing loans

C)collections G)write_offs (-)

sold G)corporate and commercial ıoaıısconsumer loans

credit cards

oıhersbr lıft.mb.r 2020

specific provisions (-)

[tet Bilıncc on Bılıncc shcet

l5

(l5)

ı Deccmbcr 2019

Additions (+)

Transfers ftom other caıegorie§ ofnon-performing loans (+)

Tİansfers to othel categories of non-perfoamingIoans (-)

collections G)wite-ofis (-)

sold C)corpomte and commercial loans

consum€r loans

credit cards

othersı DCc.mber 2020

( t37)

v. Group

8.3l6(4.182)

4.134Specific provisions (-)

et Bılınce on Bılınc. she€t

a a e[İ(

,79

a{

llI. GroupLoans İnd otherRecfivablcs with

Limitedcollectability

ıv. GroupLoens ınd Oth€rRaceiveble§ İvith

DoubtfulCollectebility

Unco|lcctible Losn§ınd othe.

Receivıblcs8449

4

l.

BANK MELLAT, MERI(EZİ: TAHRAN-İRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA vE iz*rin şunnı,nnİ

31 ARALIK 2020 TARiHi irin.c,Rlırı,a KoNSoLiDE oLMAyANriNı.xsaı TABLoLARA iı,işrix AçIKLAMA vn »ipNorı,aR(Tutarlaİ aksi belirtilmedikçe Bin Türk Lirasl ("TL") olank ifade ediimiştir.)



(iii) Information on non-performing loans granted as foreign currency loans:

The Branch has no foreign currency loans and other receivables in non-performing loans.

(iv) Breakdown ofnon-performing loans according to üeir goss and net values:

III. GroupLoans and othorReceivıble§ with

Limitedcolloctability

W. GroupLoans ınd otherReceivsbles with

Dou btfulcollcctability

V. Group

3l December 2020 (Net)

uncollectiblel.oıns ınd oth€ı

Rocciv.bles2.681

8.082(5.395)

2.68,|

to real aod legal persons (Gross)

Specific pıovisions (-)

to real and legal persons (Net)

anks (cross)Specific provisions (-)

Banks (Net)

loans and receivables (Gross)

specific provisions G)other loarls and receivables (Net)

3l Dccember 2019 (Net)

Loaııs to real and legal persons (Gross)

Specific provisions (-)

Loans to .eal and legal persons §et)

4.t348.316

(4.182)

4.|34

(Gross)pecific provisions G)

(NeD

loaıs and receivables (Gross)

ific provisions (-)

loans and receivables

l l . The policy followed for üe collection of uncollectible loans and other receivables:

Uncollectible loans and other receivables are aimed to be liquidated tbrough the collection of collateralsand legal procedures. The policy of the Branch regarding the writing-off üe non performing loans isas wliting-offthe ones that are proved a§ uncollectible.

Information on {inancial assets measured at amortised cots:

As of3l December 2020 and 3l December 2019, the Branch has no lınancial assets measuled at

amortised cost.

g. Information on inyestment in associates (N€t):

As of 3l December 2020 arıd 3| December 2019, the Branch has no investments in associates

i

h. Information on subsidiaries (Net):

As of 3 1 December 2020 and 3l December 20l

i. lnformation on joint ventures:

As of3l December 2020 arıd 3| Dec€mber 20l

80

o subsidiarieslt?ndF

.o

9, üe

venfures.

iftC

BAI\K MELLAT, MERI(EZ|: TAHRAN-İRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE iZMİR ŞUBELERİ

31 ARALIK 2020 TARİHİ iTiBARIYLA KoNsoLİDE OLMAYANFİNANSAL TABLOLARA iı,iŞriıı AÇIKLAMA VE DiPNOTLAR(Tuta.laİ aksi belirtilmedikçe Bin l'ürk Lirasl ("TL") olaıak ifade edilmiştiı.)

EXPLANATIONS AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS(continued)

I. EXPLANATIONS AND NoTEs RELATED To ASsETs (continued)

j. Information on fınance lea§e r€ceivables §et):

None. (3l Decembeı 20l9: None.)

k. Expİanations on h€dging derivativ€ instrum€nts:

None. (3t December20l9: None.)

l. Explanations on tangible a§s€ts

Immovables Vehiclesothcr Tıngible

Fix€d Assets Total3l Decembcr 2020

Co§tAccumulated deprcciationNet book vılue

3l December 2020Net book vılue at the bcginning of thOyear

AdditionsDisposal5TransfersDepreciationDepreciation, Disposal§Depreçiation, Transfersclosing net book yaluc

l4.086(3,954)l0,132

1.564(877)

687

l5.650(4,83l)l0.8l9

l0.33035

682|49

l1.0l2l84

(233)(48)

(242)(48)

(475)

ıO.ı32|41687

l41r0.819

Cost at year endAccumulated depreciation at year endclo§ins net book vıluo

l4.086(3,954)

r0.132

t.564(877)

687

l5.650(4,831)r0.819

m Explanations on intangibIe a§§ets

a.!

a

vr:i\

3l December 2020

CostAccumulated depıeciation

Net book yılue3ı December 2020Nct book vılue at the beginning ofthe year

AdditionsDisposalsTransfersDepreciationDepreciation, DisposalsDepreciation, T.ansfersclo§ing net book value

software

193 l93

Closi net book value

l9Jl63

(304)(t40)

42l(228)

l93

ı93l63

(304)( l40)

42|(228)

l93

42l(228)

l93

8l

Total

42I

(228\l93

cost at yeaİ endAccumulated depreciation at yeal end

BANK MELLAT, MERKEZi: TAHRAN-iRAN iSTANBUL TÜRKiYE MERKEZ,ANKARA VE iZMiR ŞUBELERi

31 ARALIK 2020 TARİHi İrİnınryı-a KoNSoLiDE OLMAYANFİNANsAL TABLoLARA iı,işxiN AçIKLAMA vı »ipxorı-an(T'ı.ıtarlaİ aksi belinilmcdikçc I]in Türk Lirası ("Tl-") olafak il'adc cdilmişlir,)

I.

EXPLANATIONS AND NOTES RELATED TO UNCONSOL|DATED FINANCIAL STATEMENTS(continued)

ExPLANATloNs AND NoTEs RELATED To AssETs (continued)

n. Explanations on inyestment property:

None. (3l December 20l9: None.)

o. Explanation on def€rred tax assets:

Tangible and intangible assets, netProvision for employmenttermination benefitProvision for litigationTotıl defcrred tıı ı§§et

3l Deccmber 2020Accumulıtcd

t€mporırydifferencas DeferrcdT.x,722 |44

3ı D.ccmb.r 2019Ac.umuleted

temporırydifferences DefcrredTaı

8l8 164

4.3 |928

3.73l28

1466

9l6

Total tax liability

Defcll€d tex ıs net 1.0l,| 9l6

p. Expıınations on assets held for sale

As of 3l December 2020, Non€. (3l December 20l9: None).

r. Explanıtions on other ıssets:

other asseıs iımount to 'rL 1.262 (3| December 2019: TL 440) and do not exceed l0% of th€ total balancesheet, excluding off-balance sheet commitments.

i,t6lC\

a

l

,

t

82

The Branch has no carry forward tax loss üat çan be deducted from curr€nt tax liability. Assets andliabilities, which are calculated over the temporary differences arising between applied accounting policiesand valuation principles and lax legislalion aıe accounted as TL 1.0l4 (3l December 2019: TL 916) on netbasis to deferred tax assets.

8646

1.0l4

BANK MELLAT, MERKEZİ: TAHRAN-iRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE iZMİR ŞUBELERi

31 ARALIK 2020 TARiHi irİsaRIyI-A. KoNsoLİDE OLMAYANFİNANSAL TABLOLARA iıİşrİx AÇIKLAMA VE DİPNOTLAR('l'utarlar aksi bgIirtilmcdikçç Bin'l'ürk Lirası ("TL") olarak ifadc edilmiştir.)

lI.

EXPLANATIONS AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENT§(Continued)

DPLANATIONS AND NOTES RELATED TO LIABILITY

a. Informıtion on d€posits

l. lnformation on mafurity structure ofthe deposis:

Theıe are no deposits wiü s€ven days notification and accumulativ€ deposits.

(i) 3l December 2020:

D.mınd66

I19.73220.51999.153

Upto!Monıh

1_3 3-6 6month- ı yeırMonths Month§ l yc.r rnd over

ving Deposisoreign currency Depo§its

Residents in TurkeyResidents Abroadlic Sector D€po§its

Dcposits 1.9363l

2.0l83ler lnstifutions Deposits

old VaulıDeposits 608.090

00

608.09000

729.E55

608.090The CBRTDomestic BanksForcign Banksspecial Finance Instifu tionsother

ot!l

608.090

82 129.937

Demınd88

205.53965.29

|40.240

UptolMonth

1-3 3-6 6month- lyeırMonths Month§ l yeır and ovcr Tot.l

88205.539

65.299l40.24o

ing Depositsoreign Curıency Deposits

Residents in TurkeyResidcnts Abroadlic Seçtor Deposit§

mmercial Deposits 2.389l4

19 2.468l4er lnstitutions Deposits

ld VaultDcposits 341.3 88 34l,388

The CBRTDomestic BaııksForeign BanksSPecial Financ€ ınstifutionsOüer

otı!

341,388 341.388

s{9.tl8 19 519.191

d"cıQ'

ı1

t

6J

Totıl66

l19.13220,57999.!53

(ii) 3l December 20l9:

BANK MELLAT, MERJ(EZİ: TAHRAN-İRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMiR ŞUBELERi

3l ARALIK 2020 TARiHi İrİs,{RIyLa KoNsoLİDE OLMAYANFİNANsAL TABLoLARA iı.işxix AçIKLAMA vE DipNoTLAR(TutaIlaİ aksi belinilmedikçe Bin Türk Lirası ("Tl-") olaraİ ifade edilmiştir,)

EXPLANATİONS AND NOTES RELATED TO UNCONSOLIDATED F|NANCIAL STATEMENTS(continued)

ll. EXPLANATIONS AND NOTES RELATED TO LIABILITIES (Conlinued)

2. Information on saving deposits ınsurance

(i) Information on saving deposits under the guarantee of üe saving deposits insurance fund and amountsexceeding the limit ofthe deposit insurance fund:

Under th€ Guırıntee ofDeposit Insurance

3! Decembcr Jl Doc.mber2o2o 20ı962 88

2,964 2.886

Exc.cding thc Limit of Dcpositlnsurıı!c!

3ı Decembcr 3ı Dcccmber2020 2019

3l55.664 40.434

Saving DepositsForeign Currency Saving DepositsOther Deposis in üe Form of SavingDepositsForeign Branches' Deposits under ForeignAuüorities' lnsuranceoff-shore Banking Regions' Depositsunder Foreign Authoritie§'Insurance

(ii) Saving deposits which aıe not under the guarantee ofdeposit insurance fund


(iii) Saving deposits which are not under the guarantee of saving deposit insurance fund ofreal persons

3ı December2020

3ı Dcccmbcr20ı9

Foreign Branches' Deposits and other acçountssaving Deposits and other Accounts ofcontrolling shareholders andDeposits oftheir Mother, Faüer, Spouse, Children in ca.re

saving Deposits and other Account§ of President and Membcr§ ofBoaİdofManagers, cEo and vice Pr€sid9nts and Dcposits ofıhcir Mother,Fathçr, spousc, children in çaİesaviıg Deposits and oıhe. Accounts in scope ofüe Property HoldingsDcrivcd from Crime Dcfinçd in Article 282 ofTurkish Criminal LawNo:5237 dated 26.09.2004saving Dcposits in Dcposit Bank which E§tabIished in Turkey in order toEnsase in off-shorc Banking Açtivities Solely

1.528 ]52

b. lnformation on trading derivativo finınciıl liabilities

As of 3l December 2020 wıd 3l December 2019, the Branch has no trading derivative fuıancialliabilities.

c. lnformıtion on borrowings

l. Information on banks and other fuıancial instifutions:

As of 3 ı Dec€mber 2020, the Branch has no bonowings (3l December 20 t9: None).

2. lnformation on mafurity strucfure of bonowings:

the Branch has no bonow

İs(3F.jAs of3l December 2020, l9: None)

Craıt'84

cQncrıl Loııt Lo§s Provi§ionsLoans and Rec€ivabl€s in Group I

- Additional provision for Loaııs arrd Receivablescxtended mafurities

Loans and Recaivablcs in Group ıI- Additional Provision for Loaıls and Receivables

gxtendcd maturitiesNon-cash Loansother§Totıl

Jl December 2020

2.2l3

3l Deccmber 20l9

1.042ıüith

with

]l4.41!.6.625

l34,3765.431

2. lnformation on reserve for employee rights

The provision for employee ıights has been ca|culated by estimating the present value ofthe future probableobligation of the Branch arising from the retiıement of its employees. TAS 19 requires actuarial valuationmethods to be develoPed to estimate the enterprise's obIigation for such benefits. Accordingly, üe followingacfuarial assumptions were used in the calculation ofüe total liability:

Dis€ount rate (%)

Rate for üc Pİobability of Rctiremenı (%)

Jl December 20205,49

98,8l

31 Dcccmber 20196,05

98,38

The principal acfuarial assumption is thai the maximum liability will increase in line with inflation. Thus, üediscount rate applied represents üe expected real rate after adjusting for the effects of fufure inflation. As themaximum liability is revised semi-annually, üe maximum amount of TL 7.638,96 (3l December 2019:6.730,15 TL) effective fiom January l, 202l has been taken into consideration in calculaling the reserve foremployment termination benefi ts.

a*{ otii

a

iaıç\85

BANK MELLAT, MERI(EZİ: TAHRAN-İRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE İzuİn şunrıBnİ

3ı ARALIK 2020 TARiHi İrİnlnryıı, KoNsoLİDE oLMAYANFİNANSAL TABLOLARA iı,İşrix ıçıxr,AMA vE DİPNOTLAR(Tutaİla, aksi belinilmedikçc Bin Türk Lirası ("TL") olarak ifade edilmiştir,)

EXPLANATİON§ AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS(continued)

II. EXPLANATIONS AND NoTEs RELATED To LIABILITIES (continued)

d. lnformation on other liabilities

other liabilities amount to TL 4.353 (3l December 20l9: TL 2.429) and do not exceed l09lo ofthe totalbalance sheet

e. lnformation on finıncial leasing agr€ement§

As of 3l December 2020 nd 3| December 2019, the Branch has no financial lease payables.

f. lnformation on hedging derivative financial liabilities:

None (3l Dec€mber 2019: None).

g. Iıformaıion on provisions:

l. lnformation on genera| loan loss provisions

BANK MELLAT, MERKEZi: TAHRAN_İRAN israNsul TÜRKiYE MERKEZ,ANKARA vE izvrin şunnı,rni

3ı ARALIK 2020 TARiHi irinanryr-a «oxsoı-inn oLMAyANriNı,Nsıı- TABLoLARA iı,işxix AçıKLAMA vr uipNoııaR(Tutarlar aksi be]irtilmedikçe Bin'türk Lirası ("TL") olarak ifade edilmiştir.)

Il

EXPLANATIONS AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS(continu€d)

EXPLANATıoNS AND NOTE§ RELATED To LlABlLITlEs (continued)

Movements in üe reserve for employment termination benefits duling the periods are as follows:

Prior Period Ending BılınccPıovisions Recognised During the PeriodActuarial loss / (Gain)Paid During the Period (-)Reversed f)ufin üe Period

' ocık -

3l December 20203.115

846(5l0)( l96)3.255

l ocık -31 December 20l9

2.794679

(27o\(88)

3.1ı5

In addition as of, the Branch has provided a provision for unused vacation rights amounting to TL 1.063(3l December 20l9: TL 6l6)

lnformation on Provisions Related with Foreign CurTency Difference of Foreign lıdexed Loans:

As of 3l Decembeı 2020, the Branch has no provision related to foreign currency difference of foreignindexed loans (3l December 2019: None).

Specific provisions fol non-cash loans that are non-funded and non-transformed into cash:

As of 3l December 2020, the Branch has specific provision for non-cash loans amounting to TL 316(3l December 2019: TL253).

5. lnformation on other provisions:

(i) lnformation on provisions for possibte risks:

As of 31 Decembeı 2020 aıd 3l December 2019, the Branch has no provisions for possible risks.

(ii) OtheI proyisions ifthey exceed l0% oftotal provisions:

As of 3l December 2020, the Branch had prudently provided a provision amounting to TL 28 (3lDecember 2019: TL 28). As of 3l December 2020, the Bıanch has specific provision for non-cash loansamounting to TL 316 that are classified in "Other hovisions" item at Balance Sheet (3l December20|9: TL 253).

h, Information on tax payable

l. lnformation on cuİrent tax payable

(i) Information on taxes payable

Corporate Tax PayöleTaxation of Maıketable securitiesProperty TaxBanking Insurance Transaction Tax (BITT)Foreign Exchange Transaction TaxValue Added Tax PayableotherTotaI

l39l

33325

3.0l6

45

|422o

|.644

'a ı c \

\'la

ıa

o86

4.

31 Deceınber 2020 3l Dccember 20!91.365 2.518

1ll

BANK MELLAT, MERKEZİ: TAHRAN_İRAN İSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMİR ŞUBELERİ

3t ARALIK 2020 TARiHi İrİsA.RIyLa KoNsoLİDE OLMAYANFiNANsAL TABLoLARA iıişrix AçIKLAMA vB nipxorı,ı,R(Tutalla, aksi belinilmedikçe Bin Türk t-irası ("Tl,") o|arak ifade edilmiştir.)

II.

E)(PLANATIONS AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS(Continued)

EXPLANATIONS AND NOTES RELATED TO LIABILITIES (Continued)

(ii) Information on premium payables

social security Premiums - EmployeeSocia| security Premiums - EmployerBank Social Aid Pension Fund Premiums - EmployeeBank Social Aid Pension Fund Premiums - Emp|oyerPension Fund Membership Fe€s and Provisions - EmployeePension Fund Membtr§hip Fe€s and hovisions - EmployerUnemployment Insurance - EmployeeUncmployment InsuraJrce - EmployerOücrTotıl

3l D€c€mbef 20206373

3l D.ccmbcİ 20l96l93

49

49

l49 l67

2. Information on defened tax liüility

The Branch has no deferred tax liability (3l December 2019: None).

i. Informıtion on liabilities for prop€rty ınd €quİpment h€ld for sıle and reIıted to discontinuedoperıtions

None (3l December 20ı9: None).

j. Expıanıtions on suborditrated loans


lc Informıtion on §hıreholders' Equi§

l. Presentationofpaid-incapital:

Since the entity has the status ofa Branch, paid-in capital is not received in exchange for shares.

2. The amount ofpaid-in capital, explanation on whether the registered shaİe capital system is used, ifthissysıem is used üe amount ofI€gistered shaİe capital:

crpits! §y§temResistgred shaİe caDital

Paid-in cıpital200,000

ceiling200.000

3 lnformation on share capital increases and their sources; other information on increased capital shares incurrent period:

None (3[ D€cember 20l9: None).

lnformation on share capiıal increases from capital reserves in current period:

ao

it

a

iııç\

1

None (3 ı December 20l9: None)

BANK MELLAT, MERKEZi: TAHRAN-iRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE iZMiR ŞUBELERi

31 ARALIK 2020 TARİHİ irİrınryıı KoNsoLİDE OLMAYANFiNAN§AL TABLoLARA ir,işrix .ıçıxLAMA vE DipNoTLAR(Tutarlar aksi belinilmedikçe Bin Türk Lirası ("TL") olarak ifade edilmiştir.)


Il. EXPLANATIONS AND NOTES RELATED TO LIABILITIES (Continued)

5. Information on capital commitments, üe general purpose and the esıimated sources needed for thesecommitrnents until the end ofthe fiscal year and the subsequent interim period:

None.

6. Information on income, profitability and liquidity ofthe Group by taking into consideration prior periodindicators and uncertainities and their possible effects on shareholders' equity:

Theıe is no adverse change expected in üe profitabil§ and liquidty ofthe Branch.

7. Summarised information about privileges given to shares representing the capiıal


l. Information on marketable securities value increase fund:

None (3l December 20l9; None).

İ

'ı 51 ç \

.a

88

BANK MELLAT, MERJ(EZi: TAHRAN-İRAN iSTANBUL TÜRKiYE MERKEZ,ANKARA VE İZMiR ŞUBELERi

3l ARALIK 2020 TARİHi iTİBARIYLA KoNsoLiDE OLMAYANFİNANSAL TABLOLARA İı,işxİx AÇIKLAMA VE DiPNOTLAR(l'ularlar aksi belirtilmcdikçe Bin Türk Lirası ("TL") olarak ifade cdilmişlir.)

EXPLANATIONS AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENT§(contınued)

lII. EXPLANATIONS AND NOTES RELATED TO OFF BALANCE SHEET ACCOUNTS:

ı. Explanations on off-balance sh€et commitments

Type and amount of ifrevocable commitments

l. As of 3l December 2020, all commitsnents ofthe Branch are irrevocable. The commitınents for chequesis TL 4 (3l December 2019: TL 24).

2. T}?e and amount ofprobable losses and obligations arising from off-balance sheet items:

(i) Non-cash loans including guarantees, bank avalized and acceptance loans, collaterals üat are acceptedas financial commitınents and otheı letters ofcredit:

3l December 2020 3l Dec.mber 2019Bank acccpt8nce loansLeners ofcrcditOther guarantees

Totıl

,790633

24657

4

194

(ii) Information on sectoral risk concenffations ofnon-cash loans

3ı Dcccmber 2020TL (%) Fc (%\

3l December 20l9TL (%\ Fc

gricultuı.lFaİrning and Rai§ing livestock.ForestryFishingınufıcturingMiningproduction

Electric. Gas arıd waternstruction

l25 ı00,00lc€§ 4.6084.47l

98,6595,72

90 !7,65 999633

95rJ60,34

30 5,88 l31 2,93

60 l 1,76

30 24,00 366 34,89

6J4.67l

l,J582J5

95 76,00

l00 00 l25 l

a*İ

otal42o5ı0 ı

89 o?.ıı(l

50l.M9

4,77

The Branch has no probable losses arising fiom off-balance sheet items. Obligations arising from theoff-balance sheet are discIosed in "Off-balance sheet commitırıen§."

wholesale and Retail T.adeHotçl, Food and Beve.ageTünsportation andTelecommunicationFinancial InstitutionsRea! Estate and Leasingservicessclf-Employment servicesEducation servicesHealth and social services

(%|

BA}{K MELLAT, MERKEZi: TAHRAN-iRAN iSTANBUL TÜRKİYE MERİ(EZ,ANKARA vE İzvıİn şuneı,nnİ

3l ARALIK 2020 TARiHi irinaRryı-a KoNSoLiDE OLMAyANrixaxsaı TABLoLARA iı,işxix AçIKLAMA vn nipxoııaR( l'utarlar aİsi bclinilmcdikçc Bin Türk l,irası ("'I'L") o]ara]i ifade cdilmiştir.)

lıI.


EXPLANATIONS AND NOTES RELATED TO OFF BALANCE SHEET ACCOUNTS (Continued)

Jl December 20203l December

20|9RevocabIe lette.s of guaİanleeIrİevocable lencrs of guaİanteeLette.§ of guaİantee given in advançecuaBntees given to cu§tomsOüer letters of guarantccsTotıl

, <,ı,

1.858215266

!

4.39l 54!

3. (i) Total amount ofnon-cash loans

Jl Dec€mber 20203l D.cember

20l9Non-cash Loans Given for the Pu.pose ofobtaining cash Loans

with original Maturity of l Ygaİ or Less Than l YeaıWith original Maturity of More Than l Yeaİ

Other Non-cash LoansTot.l

5. l8l5.18l

1.1141.174

(ii) Information on non-cash loans classified in Group I and Group II

3l December 2020 Group ITP5r05l0

Gıoup l!TPYP

4.67l3.88l

YPNon_ cısh Loın§Letters of GuaİanteeBaık AcaeptanccsLctters of creditEndorsementsUnderwritin8 commitrnentsFactoring Guaİanteesothcr commitnents aıd contingençiesTotıl

,790

5l0 4.67l

31 December 20l9 Group lTP YP

4|6

633

YPNon- cı§h LoınsLetters of GuaİanteeBank AcceptaıcesLetters ofcreditEndorsementsUnderwriting commitmentsFactoring Guannteesother commitmcnts and ContingenciesTotıl

|25

ı25 1.049

ıtıG\

!+

ı.ıı

90

and 3l December 20l9-

(iii) Revocable, irrevocable guarantees and other similar commitments and contingencies

b. Expıanations on derivative İinancial instrum€nts:

The Branch has no derivative financial instruments as of3

croup IITP

BANK MELLAT, MERKEZİ: TAHRAN-iRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA VE izılİn şunnı,rnİ

3ı ARALIK 2020 TARiHi irinı,nıyı,,ı KoNsoLiDE oLMAyANriN,c.xsıL TABLoLARA irişxix AçIKLAMA vn »ipxoııan(Tutarlar aksi belirtilmedikçe Bin Türk Lirası ("TL") olarak ifade edilmişlir.)

EXPLANATIONS AND NOTES RELATED TO UNCONSOL|DATED FlNANCIAL STATEMENTS(Continued)

lll. EXPLANATIONS AND NOTE§ RELATED TO OFF BALANCE SHEET ACCOUNTS (Continued)

c. Explanations on credit derivatives and risks suffered because ofthese:

A5 ofDecember 3l,2020 arıd 20|9, the Branch does not have any credit derivatives and risks sufferedbecause ofthese-

d. Explanations on contingent liabiliti€s and assets:

As of 3l December 2020, the Branch had prudently provided a provision amounting to TL 28 (3lDecember 20l9: 28 TL). As of3l December 2020, the Branch has specific provision for non-cash loansamounting to TL 316 that are classified in "oüer Provisions" item at Balance Sheet (3l December20|9: TL 253) .

Explanations on activities carried out on behalfand account ofother partiese,

The Bıanch does not carry out trading, custody and fund management services on behalf of oüers andon their account as of3l December 2020 and 3l December 20l9.

lnİ

4\

9l

:,

BANK MELLAT, MERKEZİ: TAHRAN_İRAN İSTANBUL TÜRKiYE MERKEZ,ANKARA vE iZMiR şUBELERi

3ı ARALIK 2020 TARiHi irin.ınryr,a KoNsoLiDE oLMAyANriııxsıı- TABLoLARA iıiş«ix AçlKLAMA vE DipNoTLAR(Tutallar aksi beIirtilmedikçe Bin Türk Lırası ("TL") olaİak ifade edilmiştir.)

ıV.


EXPLANATIONS AND NOTES RELATED TO ON INCOME §TATEMENT

a. Information on inıer€st incom€

l. lnformation on inteıest income on loans

Intara§t§ Receivcd from crcdit (l)

short-T€rm LoansMedium and Long-Term Loanslnterçst on Non-Performing loanspremiums Received fıom thc Resource utilisation

support FundTotıl

3l December 2020 3ı Dcc.mber 20ı9TL Fc26

25 1.733

20l 3l0

TL1.065

3386|,l

l l01.065

Fc5.860

5.780

5.86080

2.0,t3(ı)

(ı)

Chaıges and commissions received from cash credits aıe included.

lnformation on interest income on banks

From the CBRT (t)

From Domestic BanksFrom Foreign BanksHeadquaners and Branches AbroadTotıI

3ı Dcccmber 2020TL Fc

5.426|5.39,I

J! December 2019TL Fc

,1.052

16.949

20.82J 24.o0l

3

lntere§t .eçeived from Money Maİkçt Transaçtions are included.

Information on interest income on maıketable securiıies

3l Deccmber 2020TL FC

3l Dcccmbcr 2019TL Fc

Financial A§sets at Fair value Through Profit or LossFinancial Assets at Fair value Through other

comprehensive lncom€Financia| Assets measur€d aı Amortis€d costTot.l

l8,739

l8.7J9

The Branch has no inter€st income received from invesEnenı§ in associates and subsidiaries(3l December 20l9: None).

a

:ı

ltet(\

.ail

92

4. lnformation on inteıest income received from investments in associates and subsidiaries:

2.

t

uıarlaı aksi beliniImed Bin Türk Lirası ,TL ola.ak ifade edilm

lV.


EXPLANATIONS AND NOTE§ RELATED TO ON INCOME STATEMENT (Continued)

b. Informıtion on inter€st expen§e

l. Information on interest expense on borrowings

The Branch has no interest expense on borrowings (3l December 2019: None).

2. Information on interest expense given ıo investİnents in associates and subsidiaries

The Branch has no inteıest expense given to investrnents in associates and subsidiaries (3l December20l9: None).

3. Information on interest to issued securities

None. (3l Decembeı 20l9: None)

4. Mafurity strucfure ofthe inteıest expense on deposis

There are no deposits with seven days notification and accumulative deposits (3l December 2019:None).

ı Jııuıry - 3l D.cembcİ2020

rLBrnk Dcpositss.ving DepositsPublic secıo, Depo§itscomİıeİcial Depositoüer Deposils

rotılFc

Forei8n CunencyDeposilsBank Deposilscold vault

ToıılGrııd Totıl

DemandDeposits

UpıolMonth

ı _3MoDth§

Time D.posit3-6 6Month§- ıYeırrnd

Mooths ı Yeır ov.r

] 3

jJ

] ]

Total

J

]

;

]

;

rınd ı'otaı

Tim. Depo§it3-6 6Month§-

Months 1YeırDemındDeposit§

ı,3Monıhs

l Yesr ındov€r

Bank Depositssaving DepositsPublic s€ctor DcpositsCommeİcial Depositother Deposits

otıl

Foreign CufrencyDepositsBank DeposilsGoıd vault

t2

4* ! ı i \

o93

BANK MELLAT, MERI(EZi: TAHRAN-İRAN İSTANBUL TtlRKiYE MERKEZ,ANKARA VE iZMiR ŞUBELERİ

3ı ARALIK 2020 TARİHİ İrİn.lRryr,a KONSOLİDE OLMAYANFİNANsAL TABLOLARA iı-iŞxix AÇIKLAMA VE DiPNOTLAR

'I'otıl

UptoıMonth

l Jınuıry -Jı Decembcr20ı9

BANK MELLAT, MERI(EZİ: TAHRAN-iRAN iSTANBUL TtlRKiYE MnRKEZ,ANKARA VE İZMİR ŞUBELERİ

31 ARALIK 2020 TARiHi İrin.ı,nryra KoNsoLiDE OLMAYANFİNANsAL TABLoLARA iıişxix AçIKLAMA vB nipxorı-an(Tutarlar aksi bcli.tilmcdikçe Bin Türk Lirasl ("Tl,") olafak ifade ediImiştir.)

tv

EXPLANATIONS AND NOTES RELATED TO UNCONSOLIDATED FINANCİAL STATEMENTS(Continued)

EXPLANATIONS AND NoTEs RELATED To oN INcoME STATEMENT (continüed)

c. Explanations on dividend income

None. (l January - 3l December 2019: None.)

d. Explanıtions on trading loss/incomc (Net)

Jl December 2020 3ı D.cember 2019ı42.693 62.72llncome

Income from capital Maİket TransactionsDerivative Financial T.ansactionsForeign Exchange LossLoss (-)

Loss from capital Maİket TransactionsDerivative Financial TransactionsForeign Exchange LossNct ıocom. / Lo§§

(l l6.9l9)25,774

62.72l(54.132)

(54.132)

8.589

e. Explanations on other op€rating income

There are no extaordinary income accounted under other operating income.

f. Provision exp€nses r€lsted to loans and other receivıbl€s ofthe Bratrch

aa

il\\

t

''." € ,

a

Specific Provisions for Loans and Other RcceivablesLoarıs and Receivabıes wiü Limited collcctibiIityLoaİıs and Receivables wiü Doubtfu| collectibilityuncollectible lrans and Rcceivables

General Provision ExpensesMarketable securities Impairment Expcnse

Financial Assets at FaiI value Through Profit or LossFinaİıcial Assets at Pair value Through oüer comprehensiv€ Incomc

lnvç§trnents in Associates. Subsidiaries and Held-to-Mafurity securiıies ValueDccrca5c

ınvestments in AssociatessubsidiaıicsJoint venfurcs

oücrTotıl

3ı DCcCmbcİ2020ı.3l8

Jl Dec.mbcr20l9

664

6643,986

7171

1.3l89642525

2.301 4.721

o

l42.693( r l6.9l9)

94

BANK MELLAT, MERKEZİ: TAHRAN-iRAN İSTANBUL TÜRKiYE MERI(EZ,ANKARA VE İZMİR ŞUBELERİ

3l ARALIK 2020 TARiHi İrisanıyl,a KoNsoLİDE OLMAYANFiNANsAL TABLoLARA iı-işriN AçıKLAMA vt oipıorı-ın('tutarlar aksi belirtilmcdikçc I]in'rürk Lirası ("TL") oıarali ifadc cdi]miŞtir.)

IV

EXPLANATION§ AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS(continued)

EXPLANATIONS AND NOTES RELATED TO ON INCOME STATEMENT (Continued)

g. Informatİon relıted to other oPerating expenses

Reserve for Employee Termination Ben€fitsBank social Aid ProYision Fund Dgfıçit Provi§ionlmpairment Expenses of Fixed AssetsDepreciation Expenses of Fixed Assetslmpairment Expenses of Intangiblc As§etsGoodwill lmpairment ExpensesAmortization Expenses of Intangiblc A§scts[rnpairmcnt Expen§e§ ofEquity Paİticipations for which Equity Method i5

Appliedlmpairment Expenses ofAss€t§ Held for RcsalçDçprcciation Expen§c§ ofAssets Held for Resale[mpairment Exp€n§eŞ of Fixed Assets Held for saleother operating Expenses

Leasing Expenses relating to TFRS 16 exççptionsMaintenance Exp€nsesAdvc.ti$mcnt Expçn§esother Exp€nse§

Loss on sales ofAss€BothcrTotıl

3l Deccmbcı2o2o846

3ı Deccmbcr20l9

679

523 509

l62 2l6

1,785 1.95229ıl7ı9

1.787

ıl6l6

1.653

2.60l5.9l7

2.8l86.174

h. Explınıtions on profit and loss from continuing oper8tions before tax

Profit and loss before tax consists of net interest income amounting to TL 27.732 (1 January- 3l December2019: TL 45.777) net fee and commission income amounting to TL 4.579 (l January- 3l December 20l9: TLl0.469) and total othel operating €xp€nse amounting TL t7.067 (l Janüary- 3l December 20l9: TL l6.485).

i. Explanations on tax provision

Explanations on calculated current ıax income or expense and defened tax income or expense:

As of 3l December 2O20, the Branch has a current tax exp€nse amounting to TL 8.926 (3 t December2019: TL l1.017) and defened tax expense amounting to TL t23 (3l December 2019: TL l0l) anddeferred tax income amounting to TL 260 (3l December 2019: TL l80).

2 Explanations on deferred tax income oı expense arising from the temporary differences occurred orclosed

The Branch calculated net deferred tax income of TL l37 due to the occtuTence of temporarydifferences as of3 l December 2020 (3l December 2019: TL 79 defened tax expense).

Explanations on deferred tax income ot expense arising fioın üe temporaıy differences occurred orclosed

ıo 1

ı

J

None

95 |"trc\

BANK MELLAT, MERKEZİ: TAHRAN_İRAN iSTANBUL TÜRKiYE MERKEZ,ANKARA vE iZMiR ŞUBELERi

3ı ARALIK 2020 TARİHİ İrİnıRryıa KoNsoLİDE OLMAYANFiNANSAL TABLoLARA iı-işxix AçIKLAMA vr nipxoııın(Tutalla.r aksi bclinilmedikçe Bin Türk Lira§ı ("TL") olaraİ ifade edilmi ştir.)


lV. EXPLANATIONS AND NOTES RELATED TO ON INCOME STATEMENT (Continued)

j. Explanation on net profıt and losses:

To understand the Branch's current year performance, the characteristics of income or expense itemsarising fiom common banking transactions, and the dimension and recurrence of these transactions arenot required.

The effect ofa change in üe estimate of üe Branch's financial statement iteıns on profit / loss, it is notIikely to affect subsequent periods.

There is no profit / |oss pertaining to minor§ shares ofthe Branch

k. lf oth€r items in the income statem€nt exceed l07o of the incom€ statem€nt total, thepr€sentationof th€s€ ıtems in the §ub-accounts that make up at least20o/o of thes€ it€ms:

Information related to other operating expenses is included in s€ction lv-Explanations and NotesRelated to on lncome Statement tiıle "g".

a

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oa

96

BANK MELLAT, MERKEZi: TAIIRAN_İRAN İSTANBUL TÜRKİYE MERİ(EZ,ANKARA VE izııin şunnı,rni

3l ARALIK 2020 TARİHİ İrİnanıyı,a KoNsoLİDE OLMAYANFiNANsAL TABLoLARA iıişriN AçıKLAMA vr »ipNorı-an(Tutarlar aksi bclirtilmcdikçc Bin Türk t,irası ("TL") olarai ifade cdilmiştir.)


EXPLANATIONS AND NOTES RELATED TO CHANGES IN SHAREHOLDERS, EQUITY

Explanıtion on profit di§tributions:

Retained earnings of the Branch can be distributed through the permission of üe BRSA.There was no profit distribution for the years 20l5-2020.

a

b. Amount§ transferred to legal res€rves:


c. lnformation on capital increase:


d. lnformation on İinıncial a§s€ts ıt fair value through other comprehensiv€ income:

"Unrealized gains and losses" arising from changes in the faiı value of securities classified as financialassets at fair value through other comprehensive income aıe not recognized in cufrent year incomestatemenıs; they are recognized in üe "Accumulated Revaluation and/or Classification Gains /(Losses)of Financial Assets at Fair Value Through Other Comprehensive Income" account under equity, untilthe financial assets are sold, disposed ofor impaired.

ia,

91

1

BANK MELLAT, MERKEZİ: TAHRAN-İRAN iSTANBUL TÜR]dYE MERJ(EZ,ANKARA VE İZMİR ŞUBELERİ

3l ARALIK 2020 TARİHi irisaRlyıl KoNsoLİDE OLMAYANFİNANSAL TABLOLARA İı,İşxİx AÇIKLAMA VE DiPNOTLAR(]'utarlaİ aksi belinilmedikçe Bin Türk Lirasl ("TL") olarak ifade edilmiştir,)

EXPLANATIONS AND NOTES RELATED TO UNCONSOLU)ATED FINANCİAL §TATEMENTS(continued)

EXPLANATIONS AND NOTES RELATED TO CHANGES IN CASH FLOW STATEMENT

a. Information on cash and cash equivalents

l. components ofcash and cash equivalents and üe accounting Policy applied in theil determination

Cash and effectives togeüer wiü demand deposis at banks including the CBRT aıe defined as "Cash";interbanİ money maİtet placements and time deposits in banks with original maturiıies less üan üreemonths are defined as "cash Equivalents. The Branch calculates the effect of change in foreignexchange rate on cash and cash equivalents by the differenc€ between üe rates used at the balance sheetdate and üe exchange rates al üe end ofthe previous monü.

2. Effect ofa change on the accounting policies


3. Reconciliation of cash and cash equivalent items wiü balançe sheet and cash flow statements:

(i) lnformation on cash and cash equivalens at üe beginning ofthe year:

Cıshcash and EfftctivesDemand Deposits in Bankscısh Equivalentslnterbank Moncy Majket Placement§Time Deposits in BanksTotılcısh rnd cash Equivılents

3l D.cember 2020936.779301.160635.6l9

3l December 2019123.a87230 839493.048

936.179 723.887

The total amount from the operations the in prior period gives the total cash and cash equivalents amount atthe beginning ofthe cuİr€nt period.

(ii) lnformation on cash and cash equivalents at the end of yeaİ

cıshcash and EffectivesDemand Deposits in Bank§cı§h Equivalcot§lnterbank Money Market PlacementsTime Deposits in Bank§Totıl cısh ınd c.sh Equiv.leİts

Jl Dcc.mber 20201.069.469

448.523620.946

Jl Decemb.r 20ı9936.719301.160635.6l9

1.069.,l69 936.179

b. lnformatıon on cash and cash equival€nt assets ofthe Branch that is not avıilable for free use dueto legsl restrıctions or oth€r reasons:

None (3l December 20l9: None).

Explanatioııs on th€ other cish flow item§ and €ffect of chaDge§ in foreign exchange rates on cashand cash equivaıents

"Increase in the "other" item amounting toTL |2.254 (3l December 20l9: TL 535 decrease) which isclassified under "Cash flows fiom banking operations"consisis mainly of items such as fees andcommissions, foreign exchange gains/losses and oüer operating €xpenses excluding personnelexpenses.

c.

The effect of changes in the foreign cunency ratesapproximately TL 8.495 as of3l Dec€mber 2020 (3

equivalents is calculatedthe

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BANK MELLAT, MERKEZi: TAHRAN_İRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMiR ŞUBELERİ

3ı ARALIK 2020 TARİHİ İrİn,tnrylı KoNsoLiDE OLMAYANFİNANsAL TABLoLARA iriş«ix AçIKLAMA vp nipNoııı.n(Tutarlaİ aksi belirtilmed Bin Türk Lirası olaıak ifade edilm lr

EXPLANATIONS AND NOTES RELATED TO UNCONSOLiDATED FINANCIAL STATEMENTS(continued)

The volume of tran§actions relaıing to the Branch's risk group, outstanding loan and d€posittran§actions and profit and loss of the period:

l, 3l December 2020:

Brınch's Risk Group (ıı (ıı

Loaııs and other Rec€ivablesBalanc. aı lhe B€gin ing ofüe PeriodBal.nce aı ıhe End ofthe Period c)

ı!tcİa!ı ınd comDi§siotrıncoma Racaivad

lnva§tmanı! inısroaiaıa,. !üb!idiırie!

aıd joioı vaaıura!c.sb Non-C.3h

Dir€ct ınd itrdirectshereholders of tbc

BrınchCa§h Non-cı§b

othcr r.al and lagılparson§ thıı hıva baan

includ.d io th. risk groupcırh Non-c8h

52.86l41.9ll

(|)

(2)Defined in the 49th article of§ubsection 2 ofthe Baİtking Act No. 54l lThe infoımation in table öov€ inclüdes bank as ı,vell as loans.

3. Information on deposits ofthe Branch's risk group:

2. 3l December 20l9

nch'§ Ri§k Group (lı (1)

ınvastmanır inıssociııc§. 3ub3idiırie!

ınd joint ventur.!cılh Non-cılh

Direcı ınd indirect other reıl ınd lĞgılshıreholder§ ofıhe par§ons thıt hıva been

Brı[ch includ€d in ıh. risk groupcı§h Non-cısb c.sh Non-cısh

and other Rec€ivablesat the Beginnin8 ofthe Periodaı üc End ofüe Period tı)

ınd commi§§ion

l56.89452,t6l

Incomc Received

Branch'§ ri§k group (l)

DepositBalance at üe Beginİing ofthe PeriodBalaİıcc at the End of the Period (')

ıntera§t Expense on Deposit§ (J)

ınvtstnants inassociıtas, 3ub!idiariar

ınd joint v.ntura!Jı 3ı

Doccmbar Decamber2020 20ı9

Diract ınd indir.ct§hıraholde$ oftha

Brınch3l 3l

D€ctmber Deccmbel2020 20|9

oth.r r.ıl.ıd l.gılp.rson. thıt hıv. bcaı

in.lud.d io ıb. risl 8roup3ı 3ı

Daaembar Dacambar2020 20ı9

298.223 327.74|584.222 298.223

(ı)(2)

Defined in the subsection 2, anicle 49 ofüe Banking Act No. 54l l,(A§ of 3l D€c€mber 2020, TL 57t 299 and TL 5.923 of ü€ deposit of ü€ amount of TL 584.222 belong !o 8aİık Mellat lran central

- cenğal Bank oflran, rcsp€ctively.)(As of 3l Decemb€r 20t9, TL 293.600 and TL 4.62] of üe d€posit ofüc amount of TL 29t.223 belong to B8nİ M€llat lran cenıral- Central Bank of lran, respectivcly,)

İ

C^ e , c'

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99

vlı. EXPLANATloNs AND NoTEs RELATED To BRANcH,s RtsK GRoUP

(l) Defined in lh€ 49ü aIticte of subsection 2 ofıhe Banking Act No. 54l l.

(2) The infoımaıion in trbl€ abovç includ€s baıık§ as w€tl as loans.

a

BANK MELLAT, MERKEZi: TAHRAN-iRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA VE İZMİR ŞUBELERi

3ı ARALIK 2020 TARİHi irina.nryı-,c. KoNSoLiDE oLMAyANnixaNsaı- TABLoLARA iı-işxix AçIKLAMA vr nipxoTıı.n(Tutarlar aksi belini|medikçe Bin Tüık Lirası ("TL") olarak ifade edilm iştir,)

vlL

Brınah's ri§kgroup(D

8orrowingsBeginning of thePeriodEnd ofthe pefiod

ıntaİGtt Etpaısa

lnv€§tmtnts in Assmirt.s. Direcı .nd indirect shereholders of other items thıt hıte becn inclod.dSübsidisries ınd Joint venlure§ the Brınch in ıhe risk group(ı)

3l Deccmber 3ı D.cemb.r 3ı D.ccmb.rJı Dcc€mb€r 2020 2019 Jı D.ccİnber 2020 2019 Jl Dccember 2020 20ı9

(ı)

(2)

5

Defined in thc subsection 2, rnicle 49 of lhe Banking Act No. 54l lA§ of3l Deccmbef 2020: None (3l Dec4mber20l9: None).

Iıformation on forward and option agrğements and other similar derivative transactions with theBranch's risk group:

The Branch has no forward and option agleements and other similar derivative transactions as of 3IDecember 2020 and 3l December 2019.

6. lnformation on benefits provided to key management

As of 3l December 2020, benefits provided to the Branch's k€y management amount toTL 3.563 (3 t December 20l9 TL: 3.499).

vlll. EXPLANATIoNS RELATED To THE DoMEsTIc, FoREIGN, oFF-sHoRE BRANCHES ANDFOREIGN REPRESENTATIVES OF THE BRANCH

lX. EXPLANATIONS AND NOTES R_ELATED TO SUBSEQUENT EVENTS

Domestic Branch

Totıl AssetsForeign Brançh

NUmber ofEmployeeş

45country of

Incorporıtion

stıtutory shırecıpitrl

off-ShoreBanking RegionBranch

Number3

İ

a

*.oNone.

l00

EXPLANATIONS AND NOTES RELATED TO UNCONSOLIDATED FİNANC|AL STATEMENTS(Continued)

ExPLANATloNs AND NoTEs RELATED To BRANCH'S RISK GRoUP (continued)

4. Information on borrowings from the Branch's risk group:

Forcign Rcp.oflices

C*trç\

BANK MELLAT, MERKEZİ: TAHRAN-iRAN iSTANBUL TÜRKİYE MERKEZ,ANKARA vE iZMiR ŞUBELERi

3l ARALIK 2020 TARiHi İrinlnryıı KoNSoLiDE OLMAYANFiNANsAL TABLoLARA iı,işrix AçIKLAMA vE DipNoTLAR(Tutaİlaİ aksi belinilmcdikç Bin Türk Lirası ("TL") olarak ifade edilmi ştir.)

ı.

SECTİON SİX

OTHER EXPLANATIONS AND NOTES

OTHER EXPLANATIONS ON THE BRANCH,S OPERAT|ONS

on 17 october 2018, it was announced by !'oreign Assets control office ("oFAC"), opğrating under US TrcasuryDepartmcnt, that some lran-based financial and industrial institutions, including Bank Mellat, the main shaıeholder ofüeBranch, were included in the list of secondary sanctions. ın addition, after the Us announced sarıctions, SWIFT,headquaıtered in Belgium, aİınounced that some lranian banks on the sanctions list would be suspcndcd for access ıo thesystcm. Access ofthc Branch to swlFr has been cancellcd,

Following the t.ansfer ofthe Branch to the secondary sanctions lis! central Bank of üe Republic of Turkey ("CBRT")removed the Branch fıom the EFT system, and thc Branch accounts at the CBRT were closed, €xçept for obligatoryprovisions, Similarly, the closure of the placements of ıhe Branch in the domestic public baİıks and in some domesticprivate banks was Iequested by üe relatcd banks and thc funds in question were withdrawn to a laİge extent and are §illb€ing withdrawn. Thç Brançh is not able to enter into T.easury tende.s aod cannot u§e the cash it owns, a5 plaçemenıs inother banks. conssquently, there is a signilicant deçrease in the intere§l and commission income of the Branch. TheBranch docs not foresee any shonagc of capital adequacy and Iiquidity ratios in the following periods but if necessaİy, itis consid€red that resourceVcapital can be provided from İran Headquaİers to üe brançhes in Turkey, and that therewould be no problems in meeting the currenı obligations ofthe Branch.

[n the ncxt perio4 altemative opponunities will be rcseaıched, altcmative possibilities will continue to be investigated.Activities have been initiated to opt for different financial banking products, which would bring diffe.ent types ofopcrational inçome. The first limit allocations were made for the purpose of groMh in loans.

Balancc shtet size of üe Branch as of 3 1.12.2020 is TL l .236.935, a5 of 30.09.2020 is TL l.l94.085, as of 30.06.2020 isTL 1.021.878, a5 of31.03.2020 is 'rL 1.002.235, aJıd as of 31.12.20t9 is TL 1.023.390.

Capital adequacy ratio of the Branch is 84,29% a§ of31.12.2020, %86,85 as of 30.09_2020, %89,08 as of30.06.2020,%89,78 as of 3l,03.2020 and %90,86 as of31.12.20l9.

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BANK MELLAT, MERKEZİ: TAHRAN-iRAN İSTANBUL TtJRKİYE MERKEZ,ANKARA VE iZMiR ŞUBELERi

3l ARALIK 2020 TARİHİ İrinınryı-.q, KoNsoLİDE OLMAYANFİNANsAL TABLoLARA iı,işxix AçIKLAMA vo nipxoııın(]'utarlaİ aksi belinilmedikçe Bin Türk Lirasl ("TL") olafak ifadc cdiImiŞtir.)

I.

SECTION SEVEN

EXPLANATIoNS oN lNDEPENDENT AUDlToR,s REPoRT

EXPLANATIONS ON INDEPENDENT AUDITOR,S REPORTThe unconsolidated financial statements as at and for the year ended by Decembeİ 3lst,2020 were audited byRehber Bağımsız Denetin ve Yeminli Mali Müşavirlik A.Ş. and the independent auditor's report dated 0lApril202l is plesented pleceding the unconsolidated financial statements.

ll. EXPLANATIONS AND NOTES PREPARED BY lNDEPENDENT AUDITOR

None,

.c a

a

İ

l02

ııı(\


3. Information on Financial Structure

Net period profit of Bank Mellat Turkey is TRY 84.669 thousand. As of 31 December 2021 its equities are TRY 573.521 thousand, and its total assets are TRY 1.580.743 thousand.

3.1. Assessment of Financial Status, Profitability and Solvency

As of 31 December 2021 profitability ratios are as follows.

Amount (000 TL) Ratio (%)

Profit Before Tax/ Total Asset 114.602/ 1.580.743 7,25%

Profit Before Tax/ Total Equity 114.602/ 573.521 19,98%

Profit Before Tax/ Paid-In Capital 114.602/ 200.000 57,30%

The rates for 31 December 2020 are as follows:

Bank Mellat has enough cash and source that is equal to cash in order to fulfill its debts and liabilities.

4. Information About Risk Management Policies Applied by Risk Types

Risk is defined as a reduced economic benefit that might occur if any financial damage is incurred in respect of an operations or a transaction, or an unexpected expense or damage is incurred. The Bank is exposed to several risks due to the operations it is engaged in to achieve its objectives. The purpose of risk management is to identify, measure, report, monitor and control risks that are faced through defined application procedures and limits, and to determine the internal capital requirement in accordance with the risk profile to be adopted in this context.

Board of Managers is authorized to identify the norms and principles, policies procedures, applications and limits regarding the risk management system. Board of Managers may assign such power to the members, committees to be established and senior department directors provided that the scope and restrictions are specified in written.

The following aspects have been taken into consideration in the determination of risk management policy and implementation procedures.

Amount (000 TL) Ratio (%)

Profit Before Tax/ Total Asset 39.358/ 1.236.935 3,18%

Profit Before Tax/ Total Equity 39.358/ 489.564 8,04%

Profit Before Tax/ Paid-In Capital 39.358/ 200.000 19,68%


The vision, mission, strategy and objectives of the bank, Prior and main areas of activity of the Bank, its products, and their volume and

characteristics, Bank's organizational structure, human resources Past events and experiences related to exposure risks, The scope and quality of the database for risk management, The bank's technological competence and its level of contribution to risk

monitoring and management activities, Internal capital requirement and actual equity level, and the level of risk

compatible with them.

It is not necessary to develop risk management policies and procedures for all types and subtypes of risk, taking into account the size of the branch, the scope and complexity of its activities, the volume of transactions and the variety of products used. The branch management believes that the development of policies and procedures for certain risk types and sub-types within the framework of materiality principle is appropriate and sufficient. Due to its activities, the Branch is primarily exposed to credit and operational risks, and then market risks that are at a less significant level.

4.1. Principles and Policies for Credit Risk Management

Board of Managers is authorized to open Credit. Board of Managers may assign its power of opening credit to General Manager as per the provisions of Banking Law and the relevant legislations. However, in practice, all loan decisions are taken by the Board of Managers. Board of Managers is authorized to specify the scope and terms of credit activities. The Bank's lending activities are carried out in accordance with the following priorities.

Priority will be given to short-term cash loans for foreign trade transactions, which we act as intermediaries in the allocation of resources and limits for lending activities, and to non-cash loans such as letters of guarantee, letters of credit and silent confirmation that customers may need in export and import transactions.

Although it is not possible to completely avoid product and sector concentration at Branch’s credit risk in terms of target transaction types and target customer, attention is paid for the balanced distribution of credits to a large customer group.

Customer requests for other lending activities, other than those in the previous paragraph, are of secondary importance to the bank and are assessed taking into account factors such as risk-return balance, maturity and quality of collateral.

Within the scope of fund management; treasury bills, government bonds and CBRT liquidity bonds and bank bonds are invested as securities representing low risk debts. The shares representing the debts other than those mentioned above and their shareholding interests can be acquired by the decision of the Board of Directors.

Demand deposits made at other banks for banking activities, and other time-deposits made at other banks for fund management are carried out within the limits and conditions determined by the Board of Managers.

Loan allocations and disbursements are carried out in accordance with the principle of "Know Your Customer Well and Closely". No credit is assigned to or used by people and companies that have no reasonable activity background, with insufficient information about their activities, that do not provide the information


and documents within the specified time and content, whose management and/or owner has not enough knowledge, capability and transparency.

In loan decisions, in addition to the guarantees and guarantees to be received, the morality of the debtor and the capacity to generate the cash flow to be used in repayment of the credited transaction are evaluated carefully.

As a principle, loans are opened in exchange of a valid warranty. First and second group collaterals specified in the "Regulation on the Procedures and Principles for the Determination of Qualifications of Loans and Other Receivables by Banks and for Provisions to be Allocated for Them" are sought as collaterals. Entities other that material and financial assets, which are turned into cash easily and fast, have an operational market, and whose value leaves no room for debt, are not accepted as warranties.

A reasonable margin is determined for the amount of the collateral according to loan terms (interest, maturity, etc.). The deposit amount is calculated in such a way as to cover the entire risk of exposure in default. Between collateral and risk, attention is paid to the currency and maturity.

Pricing of the credits is determined according to the degree of risk, and balance of risk profit should be pursued at each credit transaction. In addition to the conditions and maturities of loans, the risks to be incurred against revenues are also assessed. Assessments are used as the basic criteria for determining the price of loans.

Limits set for total loan risk and country risks are strictly followed. Compliance will be monitored on a daily basis, and any breaches will be immediately reported to the General Manager and will be resolved as soon as possible.

4.2. Principles and Policies for Operational Risk Management

Operational risk is defined as a risk of loss that arises out of insufficient or unsuccessful internal processes, people and systems, or external occurrences. Operational risks that have the potential of causing significant losses may result in such losses as system interruption or problems, types of business conduct, in-house fraud. Operational event types do not have equal risk weights in the Branch. Principles, policies and implementations of operational risk are determined by taking the risk weight that is considered to be valid for the Branch into consideration. In the events that are appropriate for event types and possible to apply, insurance technique is used so as to reduce the risk. Primary principles, policies and measures regarding the operational risk management of the Branch are as follows.

This technique is used where it is appropriate and feasible to apply insurance technique to reduce operational risk. The Bank's senior management is authorized to identify areas for using this technique and to use its insurance policy.

In all activities of the Branch, the liabilities of those who decides and/or approves that the bank may be a party for any banking transaction and of those who are authorized to execute, perform and conclude the transaction are different from each other, and these responsibilities should not be allowed to coincide

Approval of any kind of banking transaction and actual performance of such transaction are two functions that are separated from each other by strict lines.

Those who are authorized to have any purchase/sales and investment/borrowing relationship with any addressee and to determine price, term and such conditions about such relationships cannot be granted authorization to perform operational


functions related to such transactions and to approve the transactions already performed.

In addition to distinction between approval and performance tasks, operational transactions are subject to different approval limits in terms of transaction prices. General Manager is authorized to set different limits for different kinds of transactions and to determine application principles accordingly.

The Branch supports its operational activities with hardware and software system compliant with international standards and national legislations that prevents and warns the branch about the transformation of potential risks into actual risks, that strengthens operational productivity and reliability, and that enhances effectiveness control.

The Bank takes necessary precautions to ensure that the staff follows the developments in legislation and implementation, that they are informed about these developments on time, that the content and scope of these changes are understood, and that the effect of these changes on the activities are communicated to the staff. These works are supported through the Bank's in house and external training events. Controls of coherence that are conducted, and adequacy and level of works about these issues are regularly monitored.

Growth in the internal volume of the Bank is digitized in terms of periods. This way, work load on the operational staff, trends about the work load, relationships between work force and failures, deficiencies, contradiction are all analyzed. Analysis results are assessed and necessary precautions are taken. An internal audit and internal control organization structure is established in accordance with the nature, scope and frequency of the findings of the assessments made. A sufficient number of experienced personnel are employed in accordance with the qualifications required for the work done in these units.

Internal control activities are supplementary to the daily operational activities of the Bank, and minimizing the probability and magnitude of operational risks is the main target of the internal control activities. For this purpose, the Bank's internal control unit continuously develops preventive and detective controls, and checks limits and compliance with specific scope and intervals through verifications of material errors, reporting, physical controls, approval and authorization, inquiry and reconciliation.

Regular internal control works, and frequency and quality of internal control activities are evaluated and controlled, focusing on risks. The internal audit unit shall make recommendations on the developments, trends, importance and priorities of the operational risks and precautions to be taken.

4.3. Principles and Policies for Market Risk Management

The Branch does not have active sales-purchase activities in its name, does not have a position of security or commodity that bears sales-purchase purpose, and does not use derivative tools. Taking this into consideration, the Branch is exposed to interest rate risk due to securities available for sale, and to exchange risk due to foreign currency exchange position. The following principles and policies apply to these risks, which have a low level of severity. The fixed-term resource structure of the bank in the purchase of securities

available for sale is taken into account with its weighted durations and costs.

The rules and limitations of the direction, amount and composition of the foreign exchange position of the Bank is under the authority of the Board of Directors in principle, but it may be delegated to the Risk Committee by the Board of


Directors. The Risk Committee evaluates the economic developments in Turkey and the World with a frequency it deems fit, and makes make recommendations to change on limits and restrictions related to its foreign currency position as it deems fit.

At least 80% of the Bank's net foreign currency position consists of US dollar and Euro positions, or of currencies anchored to these currencies.

4.4. Principles and Policies for Liquidity Risk Management

Liquidity Risk, which is defined to be not fulfilling the payment liabilities on a completely and timely basis as there is not cash on hand or cash entry that is at an enough level and of a characteristics to completely and timely meet the cash outflow arising out of the imbalance in cash flows, is managed within the framework of following principles and policies.

Liquidity risk is taken into account at all assignment resolutions, including the loans. Liquidity management is performed in terms of the capital used.

The maturity structure of existing bank assets and new areas of use is taken into account when determining the maturities of the bank funding resources.

Customer and maturity concentrations in non-group resources are monitored closely. The amount of liquid value to be retained and its formation are determined by considering these concentrations as well as legal obligations.

5. Information about Ratings and Their Contents

The branch has no note of rating.


6. Summary Financial Information for the Five year Period including the Reporting Period (TRY -Thousand)

ASSETS 2021 2020 2019 2018 2017

Cash and Balances with Central Bank 751.391 633.107 480.319 402.946 133.408

Banks 579.667 445.926 456.703 325.126 483.515

Receivables from Money Market - - - - -

Loans 233.722 144.225 73.396 5.931 7.952

Securities 316 389 414 245.539 376.764

Other Assets 15.647 13.288 12.558 12.205 10.999

Total Assets 1.580.743 1.236.935 1.023.390 991.747 1.012.638

LIABILITIES Deposit 964.924

729.937 549.497 548.852 708.245

Funds - - - - -

Provisions (Tax and Other) 36.194 13.081 12.626 14.280 8.851

Other Liabilities 6.104 4.353 2.429 6.359 3.167

Equities 573.521 489.564 458.838 422.256 292.375

Total Liabilities 1.580.743 1.236.935 1.023.390 991.747 1.012.638

INCOME STATEMENT 2021 2020 2019 2018 2017

Net Interest Income 73.489 27.732 45.777 126.759 43.772

Net Fee and Commission Revenues 5.153 4.579 10.469 40.052 26.527

Other Revenues (net) 50.670 15.271 300 12.937 11.660

Total Operating Revenue 129.312 47.582 56.546 179.748 81.959

Other Operating Expenses (7.804) (5.917) (6.174) (8.481) (13.409)

Provision for Loan Losses (6.906) (2.307) (4.727) (3.048) (2.272)

Profit Before Tax 114.602 39.358 45.645 168.219 66.278

Tax Provision (29.933) (8.789) (10.938) (37.268) (13.389)

Net Profit 84.669 30.569 34.707 130.951 52.889

2021 2020 2019 2018 2017

Total Number of Employees 43 45 49 51 50

Total number of Branches 3 3 3 3 3


Assets (Thousand TRY)

Equity (Thousand TRY)


Net Profit (Thousand TRY)

7. Annual Report of Bank Mellat Tehran – Iran

1

Annual Report (2015-2016)

Annual Report of Bank Mellat 2015-2016

2

3

IN

THE

NAME

OF

GOD


4

7

9

10

11

13

14

15

16

19

19

20

22

23

24

25

25

26

27

28

29

30

30

31

32

32

33

Message of CEO

History of Bank Mellat

Board Members

Organizational Chart of Bank Mellat

Part 1: Bank Mellat at a glance

Gist of financial information

Bank’s rank among other commercial banks

Manpower

Bank Mellat rank in banking network

Bank performance

Bank achievements

Bank capital renewal

Stockholders

Comparing EPS with real performance

Number of symbol opening and transaction days

Bank budget

Financial and operational performance of bank and group in 2013

Bank financial ratios

Group financial ratios

Share price and transctions

Customers of Bank Mellat

Resources vs. Consumptions

Developments of banking industry in 2013

IT and e-banking

Bank’s branches

National and international awards

Table of contents

4

5

35

36

38

39

40

42

44

47

48

49

52

54

54

55

56

57

57

58

59

60

62

64

75

Part 2: Universal banking

Improvement of Bank Mellat business model

Private Banking

Personal Banking

Corporate Banking

Commercial Banking

Performance report of Strategic Management Office

Part 3: Performance of bank’s departments

Bank Mellat towards promotion of performance quality in credit field

Participation in national mega projects

Research and Development (R&D)

Legal environment of Bank Mellat

Social performance report of Bank Mellat

Education

Online travel FX sale

Mellat Call Center (1556)

Bank Mellat Customers Club

International and FX activities

Corporate Governance in Bank Mellat

Audit Committee Performance

Internal Audit Management Performance

Risk management

Part 4: Audit report, legal inspector and financial statements


6

By virtue of the enactment approval dated 20/12/1979 of Banks General Assembly and in view of article 17 of Banks Affairs Administration Law, Bank Mellat was established on 22nd of July1980 by merger of 10 private banks and registered under No. 38077 in the Compa-nies Registry Office.

In the wake of notifying policies of article 44 of the constitution and inclusion of Bank Mellat in the related list, and on the strength of approval No. 37925T/68985 dated 24/7/2007 of Board of Ministers, and decision of Extraordinary General Assembly of banks on 6/4/2008, the legal identity of Bank Mellat was converted to “public joint stock”. In this context, Bank Mellat was listed in the Tehran Stock Exchange as 448th company on 11/2/2009, and 5% of its stocks was offered on 19/2/2009.

Since attending to the brand and visual identity of the organization is one of the require-ments of development of banking activities and attraction of customers, the bank employed suitable standards by the help of powerful consultants and changed external and internal facades of its branches all over the country. Organization Identity Project placed the bank at the global banks level.

Head office: No. 276, Taleghani St., Tehran, IranTel:+98(21) 82961 Fax:+98(21) 8296 2700Mellat Contact Center: Tehran: +98(21) 1556Other cities:+98(21) 82488Stocks Affairs Office: Stocks affairs office, financial division, Valiasr St., TehranZip:1591614311Web Site: www.bankmellat.irEmail: [email protected] Email: [email protected]:+98(21) 6697 0058-9 Fax:+98(21) 6697 0053

History of the bank

7

Board Members

Mr.Hassan RoustaBoard Member

Dr.Hamid TajikBoard Member

Mr.Mohammad Bigdeli

Dr.Hadi Akhlaghi Feizasar

Board Member & chairman

Board Member & C.E.O.

Mr.Alireza LagzaeeBoard Member


8

9

Bank at a glancePart One


10

General Meeting

Appointments Committee

Auditing Committee

Strategic Committee of Universal Banking

Remuneration Committee

Risk Committee

Secretariat Office and Public Relations Division

Security Division

AML Department

Asset & Liability Committee

Board of Directors

CEO

Deputies

Training & Research Deputy

Human Resources & Supervision Deputy

Financial Deputy

Credit Deputy

Program & Planning Deputy

Investment & Companies affairs Deputy

IT & Operations Deputy

Corporate Banking Deputy

Sales & Customers Relationship Deputy (Provinces)

Sales & Customers Relationship Deputy(Region 1)

Director General of Intl. affairs

Private Banking Affairs

Corporate Banking Affairs

Director General of the third region

Director General of the first region

Director General of the second region

Central BranchCRM & Sales Management

Organizational chart

11

Brief financial information

GroupBankDescription

20132014 201520132014 2015

A) Performance Information (Million Rial)

137,697,827 189,425,576 217,612,036 116,437,879 163,550,275 180,712,784 Operating Income

38,801,414 46,166,792 28,104,329 35,775,479 49,973,751 28,103,528 Operating Profit

13,128,180 3,525,617 24,948,748 9,781,073 1,934,836 25,049,503 Non-operating Incomes

21,978,033 14,842,936 10,870,857 16,792,379 18,303,456 12,389,457 Net Profit after Tax

4,611,984 (2,064,434) (3,998,481) 4,236,156 (2,360,133) (4,862,267) Annual Adjustments

18,769,509 18,004,421 21,361,247 16,920,314 15,939,146 22,104,241 Cash from Generated Activities

B) Balance Sheet Information (Million Rial)

1,399,729,579 1,370,403,180 1,787,478,955 1,380,358,284 1,351,721,415 1,774,577,625 Total Assets

1,319,602,893 1,293,125,142 1,703,346,339 1,309,532,822 1,280,459,402 1,695,020,293 Total liabilities

33,100,00040,000,00040,000,000 33,100,000 40,000,000 40,000,000 Registered Capital

2,087,367 2,002,957 2,149,636 Minority Interest

80,126,686 77,278,038 84,132,616 68,323,328 71,262,014 79,557,332 Total Shareholders' Equity

C) Rate of Return (%)

1.61.10.6 1.2 1.4 0.7 Return on Assets

27.4 19.2 12.9 23.7 25.7 15.6Return on Equity

D) Share Information

40,000 40.000 40,000 40,000 40,000 40,000 shares at general meeting date (million)

240 450 475 240 450 475First EPS Forecast (Rial)

408 450475408450475 Last EPS Forecast (Rial)

566 382 278420 458310Actual EPS (Rial)

33090-33090-Cash Dividend(Rial)

2,376 2,137 2,413 2,376 2,137 2,413 Closing share price (Rial)

2,003 1,923 2,1031,708 1,782 1,989 Share’s Book value

4.25.6 8.7 5.6 4.77.8 P/E ratio


12

Bank’s position among major commercial banks

Year Bank Mellat Other major Commercial Banks

Total Deposits Bank’s share

2014 788,360 2,959,596 3,747,956 21(%)

2015 1,044,615 3,748,408 4,793,023 21.8 (%)

Year Bank Mellat Other majorCommercial Banks

Totalresources

Bank’s share

2014 962,742 3,254,392 4,217,134 22.8 (%)

2015 1,291,408 4,028,236 5,319,644 24.3 (%)


Total Staff Bank's share of Total number of

staff 2014 22,020 114,936 136,956 16.1 (%)

2015 21,342 111,756 133,098 16 (%)

Bank’s share form total deposits of the commercial banks in the local currency

Major commercial banks include six banks; i.e., Melli, Mellat, Refah, Sepah, Tejarat and Saderat

Bank’ share from total resources of commercial banks in the local and foreign currency


Total Loans Bank’s share

2014 933,222 2,629,501 3,562,723 26.2 (%)

2015 1,126,780 3,210,408 4,337,188 26 (%)

Bank’ share from total staff of commercial banks

Billion Rial

Billion Rial

Billion Rial

Figures in Billion Rial

Bank’ share from total loans of commercial banks in the local and foreign currency

13

Undoubtedly, today’s world is the world of organizations, in which human resources is the most important factor of organizational change and development. Without human resources, organi-zations neither have conception nor can be administrated. Therefore, human resources is the most valuable asset of today’s organizations, because they make decisions, solve problems, and achieve productivity. In this context, reaching the bank’s targets and strategies extremely depend on spirits, endeavor, encouragement and satisfaction of the human resources, moreover operation growth in the bank has direct relations with staff efficiency and productivity, therefore enhancement and development of the bank’s staff is the ultimate goal of the human resources division.

A)Improving human resources management quality projects: Designing assessment of the headquarter staff operation. Providing balance of human resources of the bank by regions and divisions. Reviewing carrier path of the branches staff. Reviewing career path of the headquarter staff. Reviewing compliance methodology of educational documents and acceptable ma jors by the

bank. Assessing the branches management offices performance in HR. Identifying and appreciating diligent staff in annual meeting of HR. Managing plan of the incompetent staff. Devising job classification system of the bank based on the bank’s special circumstances in the

transitional period. Devising SWOT analysis of the HR planning area to devise its strategic plan. Reviewing carrier path of the specialized jobs (expert, auditor, and inspector). Changing job titles of the branches staff.

B) Human resources developmentIn line with constant strengthening and promoting HR in identifying and applying certain instru-ments for improvement of HR productivity along with global developments in the banking sector, bank has always tried to maintain and boost up its position in the modern banking industry that is based on universal banking through enhancing human resources quality.

C) Human resources composition

Human resources

Less than 5

years

5 to10 years 10 to15 years 15 to20 years 20 to25

years

More than

25 years

Total

650 1,316 5,795 5,224 4,766 3,595 21,346

Human resources based on years of service


14

Managerial Specialized Executive Professional Total

9,407 1,616 1,719 8,604 21,346

Managerial

Expert

Executive

Professional

PhD and

MA

Bachelor’s

Degree

Associate

Degree

Diploma Under Diploma Total

2,056 9,113 1,802 7,757 618 21,346

Human resources based on education

Less than 5 yearss

5 to10 years

10 to15 years

15 to20 years

20 to25 years

More than 25 years

6%

25%

27%22%

17%

3%

44%

8%8%

40%

Human resources based on years of service

Human resources based on job description

Human resources based on job description

15

4%

43%

8%

36%

3% 10%

PhD and MA

Bachelor’s Degree

Associate Degree

Diploma

Under Diploma

Human resources based on education

In line with making branches network activities more nimble, 15 branches were merged and 2 branches were established in the potentially suitable points. Number of branches and staff of the bank are as follow:

Branches and staff

Branches Staff

1,589 21,346

Number of branches and staff

22%

Bank Mellat Other Banks

24%

Bank Mellat Other Banks

Bank’s human resources share among 9 listed

banks

Bank’s branches share among 9 listed banks

Mellat Bank%3/21

Other Banks% 7/78

Other Banks% 7/75

Mellat Bank%3/24


16

Ranking first among commercial banks for FC and Rial resources balance.

Ranking first among commercial banks for the short term deposits balance.

Ranking first among commercial banks for staff per capita in attracting resources.

Ranking first among commercial banks for staff per capita in attracting Rial deposits.

Ranking first among commercial banks for branches per capita in attracting deposits.

Ranking first among commercial banks for branches per capita in attracting Rial deposits.

Ranking first among commercial banks for granting facilities.

Ranking first among commercial banks for attracting FC and Rial deposits.

Ranking second among commercial banks for balance of the non-interest-bearing cur-

rent deposits.

Ranking second among commercial banks for Rials deposits balance.

Ranking second among commercial banks for issuing L/G.

Ranking second among commercial banks for attracting long-term deposits.

34.1% growth in the total deposits in both local and foreign currency.

31.4% growth in the local currency deposits.

32.5% growth in the local currency deposits.

39.4% growth in the long-term deposits.

45.2% growth in the short-term deposits.

20.7% growth in the granted facilities.

31.3% growth in the bank’s assets.

23.2% growth in joint-income.

32.5% growth in non-joint income.

25.9% growth in total income.

Bank’s position and edge in the banking industry

Bank’s performance versus previous fiscal year

17

Changes in capital since establishment until the end of the reporting fiscal year :

Source of capital increase Capital after increase

(Million Rial)

Capital increase

(Million Rial)

Capital(Million Rial)

Change%

Date of capital

increase

Revalution of fixed assets 605,000 571,500 33,500 1706 1.09.1993

Special participation bonds subject to article 93 of 3rd development plan

1,239,000 634,000 605,000 104.8 1.09.2001

Revaluation of assets and translation of FX assets and liabilities

13,100,000 11,861,000 1,239,000 958 10.08.2005

Cash product of shareholders 16,000,000 2,900,000 13,100,000 22.14 26.04.2011

Share holders equity 20,000,000 4,000,000 16,000,000 25 24.06.2012

Revaluation of fixed assets 33,100,000 13,100,000 20,000,000 65.5 24.09.2013

Retained earnings 40,000,000 6,900,000 33,100,000 20.85 09.02.2014

Million Rials

Capital

40,000,000

30,000,000

20,000,000

10,000,000

Capital

0

5000

10000

15000

20000

72 80 84 90 91 93

87*1�� ℅7}¥�} 3}¥71

Changes in the capital

1993 2001 2005 2011 2012 2013


18

Shareholders with more than 1% shares on March 20th, 2016

ShareholderMarch 20th, 2016

Number of stocks Percent

Provincial investment companies (Edalat Shares) 11,999,999,797 30

IRI Government 6,800,000,000 17

Social security organization(SSO) 1,523,825,986 3.81

Saba Tamin Investment Co. (Public Co.) 3,884,272,273 9.71

Mehr 78 logistic services Co. 663,239,006 1.66

Tamin Atiyeh Fund for staff of Bank Mellat 2,579,762,512 6.45

Trans Iran Distribution Co. 576,730,331 1.44

Moein Atiyehkhahan Cooperative Co. 1,160,575,223 2.90

Shirin Asal Co. 483,397,223 1.21

Oil Pension Fund Investment Co. (Private Co.) 484,632,277 1.21

Iran National Investment Co. (Public Co.) 450,079,625 1.13

Mellat Financial Group Co. (Public Co.) 1,353,802,496 3.38

Others less than 1 % 8,039,683,251 20.10

Total 40,000,000,000 100

Composition of shareholders

19

TopicFirst anticipation

of EPS in 2015 (audited)

Last anticipation of EPS in 2015

(audited)

Actual Perfor-mance

March 20 th, 2015Joint incomes

Profit from Granted facilities 118,808,700 117,972,709 445,587,122

Profit (loss) from investments & placements 26,415,320 22,339,152 22,898,405

Total joint incomes 145,224,020 140,311,861 145,485,850

On-account profit paid to depositors (122,037,033) (126,641,412) (670,014,136)

Difference of definite and on- accountprofits paid to depositors

0 0 0

Profit paid to depositors (122,037,033) (126,641,412) (670,014,136)

Bank’s share of joint income (including spread) 23,186,987 13,670,449 9,471,180

Non-joint incomes

Granted facilities profit 41,590,984 32,260,896 79,979,220

Commission income 22,507,159 15,615,580 85,524,712

FX transaction result 13,639 13,391,306 21,513,661

Other incomes 2,856,957 2,819,088 3,535,842

Total non-joint incomes 66,968,739 64,086,870 60,276,437

Total incomes 90,155,726 77,757,319 69,747,617

Expenses

Administrative and general expenses (35,397,196) (36,652,899) (39,483,389)

Doubtful loans expenses (7,647,336) (3,678,259) (1,005,804)

Financial expenses (11,235,752) (11,766,305) (12,181,482)

Commission expenses (4,231,509) (3,854,894) (3,407,301)

Other expenses (10,779,647) (1,039,899) (490,523)

Total expenses (69,291,440) (56,992,256) (56,568,499)

Profit (loss) before tax 20,864,286 20,765,063 13,179,118

Tax (1,872,825) (1,780,447) (789,661)

Net profit (loss) 18,991,461 18,984,616 12,389,457

No. of bank’s shares (million) 40,000 40,000 40,000

EPS 475 475 310

EPS forecast versus actual performance


20

Bank’s budget

Number of symbol opening and transaction days

Description Amount (Million Rial) Audited

Incomes from granted facilities 145,604,912

Incomes from investments and placements 23,766,255

Commissions and other Incomes 48,943,298

Total Incomes 218,314,464

Paid profit to investment deposits (148,895,057)

Other operational expenses (17,848,731)

General and specific provisions expenses for public loans (3,587,113)

Personnel, general, and administrative expenses (42,899,522)

Total expenses (213,230,453)

Operating profit (loss) 5,084,011

Net non-operating incomes (expenses) 16,372,341

Profit (loss) before tax 21,456,352

Tax (1,405,343)

Profit (loss) after tax 20,051,009

Number of shares (Million) 40,000

EPS forecast 501

Description 2014 2015

Symbol opening days 227 229

Transaction days 227 243

Forecast for the year 2016 based on the 9 month performance ending (21/12/2015):

The information has been extracted from Tehran Stock (TSE) Exchange website.

21

Financial and operational performance of the bank

GroupBank

Item Increase. (Decrease)%

2014(reviewed)

2015Increase (decrease)%

2014 (reviewed)

2015

1. Profit & loss

A) Main incomes

33.1137,016,012182,391,72123.2118,081,566145,485,850Joint incomes

7.655,935,18160,169,06427.247,403,54560,276,437 Non-jointincomes

B) Expenses

4627,671,23375,140,34045.927,062,69938,948,339Administrative and general and expenses

40.7652,838,122934,774,17243.394,942,742670,014,136

Paid profit & cost price of goods and services Expenses

(86.3)5,122,150703,397(79.7)4,960,3431,005,803Doubtful loans expenses

(90.1)5,715,092565,505(91.3)5,668,293490,523Other expenses

4.815,297,98237,602,9161413,673,43978,358,815 C) Financialexpenses

(25.9)16,306,08412,083,819(31.3)19,177,59513,179,118 D) Profit beforetax

(26.8)14,842,93610,870,857(32.3)18,303,45612,389,457E) Net profit

2. changes in investments

5.541,863,3509,041,7534.115,300,14523,085,546A) ) tangible & intangible fixed assets

2237,662,54045,959,3412.124,859,67025,383,779B) investments and partnerships

47.263,396,24393,345,78872.955,992,35496,833,735C) Other assets

29.6998,221,0821,293,347,63129.1998,400,4831,289,389,152D) Profit generating assets

3. Changes in Capital structure

8.977,278,03884,132,61611.671,262,01479,557,332A) Shareholders’ equity

31.71,293,125,1421,703,346,33932.41,280,459,4021,695,020,293B) Liabilities


22

201320142015RatioItem

A) Operational Ratios

25.522.824.3Bank share from large commercial banks’ resources (%)

76.177.569.5Net facilities to deposits (%)

8.87.95.8NPL to net loans (%)

27.413.832.5Growth rate of deposits (%)

20.48.520.6Growth rate of loans (%)

5.15.34.5Equity ratio (%)

B) Liquidity ratios

0.90.90.7Minimum cash ratio (%)

94.683.1167.7Liquidity ratio (%)

570600810Resources per capita to branches (Billion Rial)

31.335.148.9Staff 's deposit per capita (Billion Rial)

C) Profitability ratios

23.725.715.6Return on equity (%)

1.21.40.7Return on assets (%)

14.29.0(32.3)Net profit growth rate (%)

69.369.484.5Expense to income ratio (%)

10.911.15.9Commission's share from total income (%)

D) Stocks market rations

420458310Earnings per share (EPS) - Rial

33090-Dividend per share (DPS) -Rial

Net facilitiesTotal deposits

Overdue, NPL and doubtful loansNet facilities

Facilities of the reporting year Facilities of the previous year

Shareholders’ equityTotal assets

Cash + Items in transit total assetsResource subject to legal deposit

Cash flow from operationNet profit

Total resourcesNumber of branches

Four deposits Number of staff

Profit after tax Shareholders’ equity

Profit after tax Total assets

Reporting year’s net profit-previous year’s net profitPrevious year’s net profit

Doubtful loans expenses + operational expenses Gross operational income

Services commission Total income

Net profitTotal shares

Attributable profit Total shares

Deposit of the reporting year- Deposit of the previous year Deposit of the previous year

Bank’s resourcesLarge commercial banks’ resources

Financial ratios

23

201320142015RatioItem

A) Operational ratios

25.522.824.3Bank share from large commercial banks’ resources. (%)

76.177.569.5Net facilities to deposits (%)

8.87.95.8NPL to net loans (%)

27.413.832.5Growth rate of loans (%)

20.48.520.6Equity ratio (%)

5.65.64.7Proprietary ratio (%)

B) Liquidity ratios

0.90.90.7Minimum cash ratio (%)

85.4121.3196.5Profit liquidity ratio (%)

570567763Resources per capita to branches (Billion Rial)

30.435.146.5Staff deposit per capita (Billion Rial)

C) Profitability ratios

27.418.913.5Return on equity (%)

1.61.10.7Return on assets (%)

51.175.687.1Expense to income ratio (%)

16.98.94.8Commission share from total income (%)

D) Stocks market ratios

566382278Earnings per share (EPS)

Bank Mellat resourcesLarge commercial banks resources

Net profit Total deposits

Overdue & NPLTotal loans

Reporting year’s deposits- Preceding year’s depositspreceding year deposits

Reporting year’s loans-Preceding year’s loansPreceding year’s loans

Cash +Funds in transitResource subject to legal deposit

Cash flow from operationNet profit

Total resourcesNumber of branches

Four deposits Number of staff

Profit after tax Average of shareholders’ equity

Profit after taxAverage assets

Doubtful loans expenses + Operating expenses Gross operating income

Services commission Total income

Attributable profit Total shares

Shareholders’ equityTotal assets

Group’s financial ratios


24

Bank’s shares namely “WebMellat” was registered in Tehran Stock Exchange on 11th of Feb 2009, in group of banks and financial institutions. The Bank’s shares status during the last 6 years are as follow:

Capital(Million Rial)

Share price at the end of year(Million Rial)

Market value(Million Rial)

Symbol open days

Value of transacted shares

(Million Rial)No. of transacted shares

Fiscal yearended on

13,100,0001.36517,881,5002312,782,8052,336,586,0162009

16,000,0002.08233,312,0002251,602,437911,923,3392010

20,000,0001.56131,220,0002284,057,2171,922,789,3382011

33,100,0001.19439,521,4002152,882,8112,408,269,0772012

33,100,0002.544101,760,00021515,072,0506,176,229,9682013

40,000,0002.13785,480,0002277,909,3893,641,647,7762014

40,000,0002.33893,520,00022915,710,3677,046,704,1892015

Share's Price

Bank in the TSE /status of transactions and share prices

1.365

2.082

1.561

1.194

2.544

2.1372.338

20102009 2011 2012 2013 2014 2015

3000

2500

2000

1500

1000

500

0

25

Currently, customers of the Bank comprise public and private legal and natural entities totaling 29,212,802 persons, holding 42,484,949 accounts in Rial and FC.

NPL ratioThe average NPL ratio in the commercial banks is 12%, while it is only 6% for Bank Mellat. Given above and considering the total granted facilities, the bank has got the greatest achievements of all in debt collection.

Status and developments of banking industry in 2015Banking industry enjoyed a premium position among 43 different industries and 568 listed companies in the primary and secondary market and ranks among top ten industries. The growth of listed banks in the stock exchange after declaration of the article 44 and also the obligation to getting listed in stock market in recent years have led to more connection between capital and money markets.It was the first time in recent years that the depositors received more interest than stock market. After several years the real interest paid to deposits was positive because of controlling the rate of inflation in the previous year.Although this benefited the depositors, the situation got complicated and thegovernment decided to modify the interest rate. Currently, the market value of the banks in the primary and secondary market is estimated at 498 thousand billion Rials.

Major achievements Obtaining interbank proposal system trophy. Organizing “Iran’s book capital” festival in cooperation with ministry of

Culture And Islamic Guidance. Rejoining to the SWIFT system. Establishing cashless society in Kish Island. Investing Rial 80,000 Billion in South Pars. Granting facilities for renovation of 30,000 worn out taxies. Participating in the public interest activities. Participating in cultural and artistic activities. Obtaining the lowest NPL ratio among large commercial banks. Obtaining the golden Trophy of national popular brand in banking and

e-banking services from national festival for superior brands in 2014.

Customers of the bank


26

Evaluating bank’s maturity in utilizing Big Data and devising its

roadmap

Implementing cash dashboard system.

Launching the dynamic report maker system.

Launching digital archiving system for branches vouchers.

Upgrading technical and process infrastructure of security inci-

dents management.

Developing infrastructure of centralized security services (such

as patch management and Active Directory).

Establishing the Information Security Management System in

e-banking.

Implementing the identifying current status phase of the SOC.

Protecting the bank’s website against phishing.

Launching on-line inquiry system for customers to reduce KYC

risk.

IT and e-banking activities


2829,212,802Customers42,484,949Accounts

4,539ATMs320Round the clock stations

5,234 Branch POSs769,635POS

3,306,790 POS transactions (Billion Rials34,347,436Debit cards19,955,209Prepaid cards (voucher & gift cards) 2,389,961Active mobile banking customers1,780,779Active e-banking customers

Bank’s network

With due regard to its brilliant performance, bank Mellat has obtained remarkable laurels in the past three decades.

National and international laurels

29

Top Place by The Banker , Institute2000

First place among public banks,2003

ISO 2000:9001 form-MOODY Inc.

Top place between trade bank Appraisal of Presitdent

National and international laurels

Appraisal of ministry of Trade for wheat purchase

plan

The only selected bank for enhancement of health system and cleanup,2010

Obtaining National EFQM reward in

Appraisal of ministry of Finance and Economic

Affairs,2006

Top Place by The Banker , Institute2002

Obtaining higher intreprenure in national conference of intreprener-

ship in 2014

Obtaining honesty statue in Electronic Banking

in2014

Obtaining higher organization in IT & healthy administrative manage-

ment in 2014

Commemoration of twelfth EFQM congress Obtaining honesty statue

Obtaining National EFQM reward in 2013 fiscal year Obtaining six rank in 2014


30

31

Part TwoUniversal Banking


32

Improving business model of the bank

Achievements of universal banking

Given the recent developments in the business environment regulations and conditions as well as increasing customers’ expectations along with their more complicated requests, transition from traditional banking to universal banking is in the bank’s agenda.

Generally speaking, achievements of implementation of universal banking include customer satisfaction, profitability and risk management. these achievements can be categorized in the main business lines (customers area) and supporting units.

Universal banking is actually a one-stop shop in which customers can get all their services including: insurance, leasing, securities transactions, payment orders, etc. In fact, in universal banking appropriate services are provided for each customer groups according to their needs. There are three groups of customers in the bank based on their size and entity: per-sonal, corporate, and commercial.

Number of customers: smallType of customers: large

Number of customers: large Type of customers : small

Modern banking

Focus on customer

Traditional banking

Focus on product

CommercialBanking

CorporateBanking

PrivateBanking

33

Table 1: Achievements of universal banking in customer area

Corporate BankingCommercial and Personal Banking

•Transferring knowledge and technology for designing proposition.•Categorizing the customers.•Planning for establishing, implementation and pilot start-up.

• Settlement of the customer-oriented concept instead of product-oriented. image and decision making based on the customer-communication level.•Creating operational program based on the balanced score card(BSC) and customers.•Implementation of the pilot project, products/services/procedures pathology and improving them gradually.

Sale Management area

•Redesigning organizational chart of branches and branches management based on the new business model.•Selecting and training qualified staff for Relations Manager post.•Preliminary design of operational plan based on the new business model.

Table 2: Achievement of implementing universal banking in the supporting units’ area

Financial areaRisk and Credit area

• Identifying key processes for offering services to cus-tomers and identifying improvable points

• Analyzing jobs related to approved structures in universal banking• Evaluation and preparation job description and qualifications for universal banking• Designing the Pattern for Compensating Services in Corporate Banking

Compliance WorkgroupOperations Improvement Workgroup

• Preparation of agreements for Presenting services to customers and subsidiaries.• Designing preliminary copy of processes providing service between customers and subsidiaries.• Making common targets for selling products and ser-vices between customers and subsidiaries.

• Establishing excellence centers structure and customers groups • Improving some of key processes based on new business model• Establishing new departments based on the bank’s new business model


34

Promoting remote services plan by trained staff among more than 50 percent of Branches.

Increasing non-interest-bearing depositsIncreasing non-interest-bearing deposits festival’s prizes. Performing bank’s social responsibilities including school construction in deprived provinces, helping to the atonement head quarter in order to release the unintentional crimes prisoners. Granting interest-free facilities, enhancing marriage interest-free facilities up to 100 million rials, and constructing library out of non-interest-bearing deposits.

Owj plan of the bank:This plan was designed with the purpose of absorbing current non-interest-bearing financial resources, and short-time deposits from customers and granting facilities proportionally.

Developing insurance desks in branches:Developing insurance services providing branches.Designing and implementing systems for selling insurance policies in order to

activate the possibility to cover women and students in all branches.

Developing brokerage services in branches:Equipping the selected branches and receiving license from stock exchange or-

ganization (total branches: 50, Mellat brokerage exchange branches: 40, Mofid Brokerage branches:10).

Improving leasing services in branches: Improving selling system of products and leasing services to receive the reports of the branches providing services. Developing branches that provide leasing services. Assigning index and target, monitoring performance of the branches in operational plan.

Developing investment banking in branches:Developing selling system of investing units in all branches.Selling Andukhteh Mellat Fund investment units in all branches.

Personal banking

35

C) Performance of leasing products

Mahan’s purposed value package.

All leading and successful businesses have perceived that it is necessary to pay atten-tion to the valuable and pivotal customers which create the most income for the bank. Personal banking management focusing on special customers’ requirements and appreciat-ing their special position, has presented “Mahan’s purposed value package”.

According to this plan, customers are considered as precious one on the basis of the sum of quarterly weighted average of their investment deposits (short-term and long-term), non-interest-bearing accounts (current and saving) holding with the bank. Pre-cious customers may take advantage of the Mahan’s purposed value package products and services if they complete and sign the application form of Mahan’s purposed value pack-age. Holding continuous meetings by branches manager with precious customers in order to introduce the new Mahan plan, opened the way for an effective relation with them and would lead to initiate continuous added value for bank and customers. In this way Bank would achieve a more comprehensive perception of the special requirements of this kind of customers. Meeting these requirements, would lead to customers’ satisfac-tion and consequently will enhance profitability of the Bank.

Some of the special services for Mahan’s customers are as follows: Issuing free check book and special Mahan’s access cards as per customers’

request.Various insurance products Various credit products Other priority services

Performance/AchievementsProject

•Initiating 200 round the clock Stations •Initiating 2,000 cashless ATMs•Increasing the number of ATMs to 4,569 •Cooperation with petroleum ministry in the national plan of “cruise”•Initiating 3,000 fuel Pay Stations in 2,700 of Gas Station•Issuing 500,000 Multipurpose cards ( Fara Bank )•Initiating gift card sales system in internet via website of the bank•Initiating OTP SMS on Internet Banking System •Withdrawal of funds without Card from ATMs •Equipping branches to the POSs (1,000 units )•Increasing shop POSs to 800,000 units

Developing Electronic Services


36

Necessity of launching corporate bankingIn the current competitive banking environment, presenting

special services to customers would lead to increase their

loyalty, management of incomes and expenses, and increase

profitability. In this context, Bank Mellat has made big changes

in its structure by implementing Corporate Banking for custom-

ers that bring long term profitability with a certain risk level.

In an endeavor to keep pace with top international banks and

in order to strengthen the brand of the bank, Corporate Bank-

ing Management officially started its operations in March 2013

in order to cater for the big corporate customers.

Corporate Banking

Corporate Banking MissionThe main mission of Corporate Banking is creating value for the big corporate customers. These customers at least should have had sales equaling Rial 300 Billion in 2013 and according to the type of the customers’ requirement and geographical location, relations manager will be allocated to them in order to recognize customers’ requirements and suggest the best packages to them. Creating and increasing value for customers and improving key processes for offering special services to them, design-ing unique products and services, and making long term win-win relations with them are the main goals of Corporate Banking management. Through offering various types of banking and non-banking services to large corporate customers, Corporate Banking provides their needs in faster and better manner and in-creases their satisfaction.

37

The most important steps in corporate banking Presenting services to 216 customers in Zafar branch and 75 customers in the central branch. Holding general and expert internal and external training to empower relations managers and create global standards and enhance quality of the staff to cater selected corporate cus-tomers. Performing all infrastructure affairs including creating new structure and processes, job score, carrier path, performance-based rewarding, indexing staff performance based on Cor-porate banking Goals Concluding MOU with organizations and companies to achieve the bank’s objectives and enhance profitability. Management of Moheb systems, special payment, settlement of funds through Shetab Sys-tem, Electronic payment of treatment costs, Funds Management of organizations. Conducting assessment possibility of establishing corporate banking office in other provinces.


38

Attracting new customers and reviving inactive ones Adopting branch oriented approach Attracting new customers Activating inactive customers that have corporate banking capacity Evaluating relations managers of the customers

First office banking in Iranian banking system

Plans, projects & participations-performance of systems designed by corporate banking

Moheb System

Measures in the pipeline

Remitting funds through Shetab systemSpecial Payment

• Facilitating and accelerating in organization’s fund payments with Shetab card • Allocation of internet port to selected organizations and companies without creating separate electronic systems

• A type of group payment order, without issuing check • Receiving beneficiaries particulars via file/web service • Presenting report of funds receivers

Corporate banking: 2 customers Other areas: 43 customers

Corporate banking: 10 customers Other areas:40 customers

Electronic Payment of Treatment Expenses

• Installing POS-PC and Omitting cashier • Connecting POS with HIS system of hospital • Clarifying financial turnover of the health system resource

Region 2: Four branches managementRegion 3: Six branches managementRegion 4: Four branches management

funds management for organizations• Issuing integrated supporting account for organization/company • Connecting current accounts of subsidiaries to the supporting account• Electronic transfer of the funds to the supporting account• Presenting reports of subsidiaries accounts balances and profit share of each one in the supporting account via Moheb system

Different Areas: 34 customers

39

In line with realizing the objectives of resisting economy and furtherance Bank’s

plans; commercial banking unit has studied in different economic sectors, along

with recognizing the capacities of each of them according to their financial trans-

actions and being economical, by performing marketing researches to meet their

requirements and also coordinated with supporting units to design and produce

their required services.

The proposed package designed for the target customers includes facilities and

credit services, e-banking services and affiliated companies services (insurance

and leasing) based on their requirements.

Value package for down-stream petrochemical industries

Value package for capital market experts

Value package for the ICT market participants

Value package for distributor companies

Improving clients experience in purchasing export L/G

Feasibility study for launching virtual center to provide services to corporate

customers

Certified check

Commercial Banking

Separating market sectors Organizing sales department. Developing Financial Excellence Center. Paving the way for MIS (management information system). Modifying financial accounting structure. Management accounting. Market risk management and liquidity. Developing Credit Risk Excellence Center.

Measures taken for universal banking project


40

Customers groups in universal bankingProviding quality services to customers requires better understanding from them. Thus, in the universal Banking project, Bank Mellat has separated businesses into 3 groups of customers and all of the customers would be classified in this classification.So. that commercial and corporate banking cater for lagal entities and personal Banking, would be in common in pro-viding services for real and legal entities according to their requirements.

Corporate Banking Large private and public companies with a high volume and variety of activities.

Legal entities with a medium to high volume and variety of activities

Natural entities from different levels and classes each of which having their own particular requirements

Commercial Banking

Personal Banking (retail)

41

Schematic diagram of credit procedure in the Bank

Customer

Pay

men

t

TAM system

Boardresolution

Customer’s good record

Sending notification (post)

Legal action

Negotiation tolerance

Tarh va Andisheh Company

Making inquiry report of credit information and assessments of

collaterals (tadbirgaran Co)

Using recall mechanism and developing on time

repayment culture

Sending information about loans itemsand customers by IT division

Repayment of facilitieson maturity date

implementing the resolution& taking

collaterals

advising

Credit decision makingresource beneficiary system information, aptitude and capacity estimating

expert reportingBranch

Effective steps of the bank towards quality excellencePerformance of credit area

In the economic structure of the country, banks are the focal point of economic sectors in financing and priority of referring active customers in economic fields in order to meet their financial requirements, therefore, performance quality of credit division plays an important role in success of any bank as well as economic devel-opment of the country. By understanding this issue, Bank Mellat has paid special attention to credit process, allocating resources and facilities, and also observing credit soundness and credit risk management. Enjoying highly experienced experts in the credit area and designing and imple-menting strategic operational systems, the bank is honored to be known as a pio-neer in enhancing credit knowledge and specialty in the country.In general, key factors of optimizing credit processes, credit scoring and optimized allocation of facilities & liabilities are as follows:


42

Participation in national mega projectsIn line with the reviewed credit decision-making processes and delineation of roles of divi-sions, and reforming organizational structure and adopting a risk-based-approach for each customer in credit risk assessment area, one of the anticipated achievements was a mean-ingful reduction in NPL ratio versus the recent past years. Properly granted facilities and purposeful injection of resources in projects, besides helping economy of the country in line with local production and launching projects have led to preventing and curbing NPLs. The following table depicts participation of Bank Mellat in some of the national projects and participation with large companies:

Civil Partnership out of letter ofagreement with the Sapco100Bronze Industrial Group1

working capital -Civil partnership LC obligations

18004262

SAIPA Group2

Civil Partnership for housingConstruction200Abniyeh Hemmat3

Civil Partnership withcommercial sector170Atinegar afam4

Civil Partnership150Tejarat Nour Abrar5

Custom guarantee300 Pourateb6

Overdraft100EXIR Pharmaceutical Distribution Co.7

Civil Partnership facilities200Soha Helal Distribution Co.8

Civil Partnership facilities350 Saha Kish 9

Civil Partnership facilities2,000 Iran Tele-communications Co.10

Civil Partnership facilities350Boland Tabagheh Co.11

Sight import LC336Electro Movalled Engineering Co.12

Civil Partnership1,500Iran Khodro Co.13

Forfaiting out of CBI credit line2,200Iran Khodro Co.14

Working Capital- Civil partnership 1,000 Sapco15

Local Deferred LCs in IRR400Sapco16

working capital- Civil partnership5,000Iran Khodro Co.17

Profit Sharing250 Electro Movalled Engineering Co.18

Sight import LC500Sapco19

working capital-Civil partnership+ Overdraft300Golnaz Food Industrial Group 20

FX payment orders500Rastikar Alborz Co.21

Nature of the FacilityAmount billion

RialsCompanyRow

43

Partnership in Working Capital110Isfahan Vegtable Oil Industrial Factories Co.22

Working Capital100Ramak Fars Co.23

Working Capital70Khousheh Fars Flour Mills24 Working Capital100Lucky nuts Co.25

Working Capital170Farsnov Cement Co. 26Sight import LC100Kavosh Kimia Kerman Co.27 Fixed Capital200Kowsar Hospital28 Completion of dormitory and central building80Shiraz University29

Fixed capital350Abyek Cement Co.30Working Capital300Fateh Sanat Kimia Co.31 Contractor/non-Contractor L/Gs 1,000Fateh Sanat Kimia Co.32Working Capital700Naghshe Jahan Suger Co.33Local Deferred LCs in IRR200Machine Sazi Arak (MSA)Co.34Working Capital1,000 Fars University of medical Science35Local LC100Tehran Galvanizeh Borna36Import LC100Tehran Galvanizeh Borna37Local commercial profit sharing70Tehran Galvanizeh Borna38Local commercial profit sharing400Ferdos Distribution Co.39Civil Partnership100Aria Dana Leasing Co.40 Civil Partnership50Modern Auto light Industries Co.41Local commercial profit sharing35Abzar Sara Co.42Civil Partnership350Margarin Co.43 Customs guarantee50Margarin Co.44 Civil Partnership280Shahid Bahonar Copper Co.45 Civil Partnership120Shahid Bahonar Copper Co.46 Civil Partnership300Hejrat Distribution Co.47Non-contactor L/G in IRR100 Sepahan Industrial Group48Partnership in working capital150Sepahan Industrial Group49Partnership in working capital315Paudraad Co.50Partnership in working capital100Pishro Tashkhis Fardavar Co. 51Partnership in Fixed capital107Pishro Tashkhis Fardavar Co.52

Non-contactor L/G in IRR500 MAPNA Turbine Engineering and ManufacturingCompany (TUGA)53

Civil Partnership+ Workingcapital450 MAPNA Turbine Engineering and Manufacturing

Company (TUGA)54

Civil Partnership for Housing Construction100Faculty Welfare Fund of Payam-e-Nour University 55

Sight import LC300Debsh Sabz Gostar Co.56Partnership in working capital750Debsh Sabz Gostar Co.57


RialsCompanyRow


44

Local commercial profit sharing650Daroupakhsh Distribution Co.58Partnership in working capital200Ghasem Iran Co.59Partnership in working capital100Ghasem Iran Co.60Local commercial profit sharing100Darman yab darou Co.61

Overdraft under Forfaiting100Darman yab darou Co.62Contactor L/G in IRR350Zolal Iran Co.63Non-contactor L/G100Pajuh Tashkhis Fardavar Co.64

Civil Partnership5,000National Industry Copper Co.65 Civil Partnership300Rayan Saipa Leasing Co.66 Civil Partnership180Shan Dasht Co.67 Civil Partnership50 Farmed Pars Pharmacy68 Civil Partnership400Tehran Cement Co.69 Civil Partnership600Iran Leasing Co.70 Civil Partnership50Pak Dairy Products Co.71 Civil Partnership350Noble in the steel industry72Non-contactor L/G300Fakour Sanat Tehran Engineering Co.73

Payment Order150Tejarat Javid Arian Co.74 Civil Partnership120Akbariyeh Co.75 Guarantee100Golbarg Baharan Co.76 Civil Partnership280Golbarg Baharan Co.77 Civil Partnership1,500Pasargad Petroleum Co. 78 Civil Partnership70Fakour Sanat Tehran Engineering Co.79 Civil Partnership1,000National Industry Copper Co.80 Civil Partnership70Pouya Protein Co.81 Civil Partnership130Khousheh Dasht Co.82 Civil Partnership200Milad Carpet Co.83 Civil Partnership60Tak Makaron Co.84 Civil Partnership440Marinasun Co.85 Civil Partnership125 Dr. Abidi Pharmaceuticals86 Civil Partnership200Adora Teb Co.87 Civil Partnership100Saveh Cement Co.88 Civil Partnership200Mobin net Tele-communications Co. 89

Civil Partnership5,200Mobile Telecommunication Company of Iran (MCI)90

Forfaiting400Zamyad Co.91 Civil Partnership900Zamyad Co.92 Civil Partnership200Arvand Plastic Co.93 Civil Partnership1,450Mammut Co.94 Customs Payment Guarantee500Mammut Co.95 Civil Partnership500Paxan Co.96


RialsCompanyRow

45

Civil Partnership500Shirin Asal Food Industrial Group97Profit sharing500Behpakhsh Co.98

Civil Partnership250Sam Electronic Co.99 Payment Order and B/E3,000Sam Electronic Co.100

Working capital +fixed capital250161Saaf Film Co.101

Working capital400Nejati Industrial Group(ANATA) 102Working capital80Nejati Industrial Group(ANATA) 103

Working capital import LCUSD 2506,000,000Amin Pharmaceutical Co.104

Working capital 6 80Tabriz Can manufacturing Industries 105Working capital300Maral Sanat Co.106Fixed Capital185Khoshgovar Tehran Co.107

Working capital – CivilPartnership90Khoshgovar Tehran Co.108

Working capital Internal LC200500Goldiran Industries Co.109

Import LCLocal LC

250100Kashan Amirkabir Steel Co.110

Working capital11,000Tehran Khoshgovar Co.111partnership in working capital50Isfahan Mobarakeh Steel Co.112Working capital40Azarbaijan tissue Co.113Working capital170Nafis Glass Co.114Fixed capital800Arian Kimia Tak Co.(MY)115Fixed capitalFixed capital

EUR 220 6,439,966Nirouchlor Co.116

Fixed capital100Isfahan University117Working capital850Zahravi Pharmaceutical Co.118

Working capital- civil partnershipLC obligations

1,800 4,262Saipa Co.119

Working capital300Ronak Daru Co.120Working capital civil partnershipLC obligationsLC obligations

4003,122400

Bahman Diezel Co.121

Working capital- Civil partnership31.5Zaeim Electronic Industries Co.122Working capital- Civil partnership450Asia Kabir Steel Co.123

Working capital- Civil partnership1,500Central organization for rural cooperatives (CORC)124

Working capital -Civil partnership100Siba Motor Co.125Working capital -Civil partnership2,700Saba Tamin Co.126Working capital (Local LCs) 700Bana Gostar Karaneh127Working capital - Civil partnership1000Oil Turbo Compressor Construction Co.128


RialsCompanyRow


46

Working capital - Civil partnership400 SADRA129Working capital (LG)1900SADRA130Working capital (LG)2500Jahanpars engineering & construction Co.131Working capital - Civil partnership2000Behran Petroleum Co.132Working capital - Civil partnership1000Tabriz Petroleum refinery Co.133Working capital (LG)1200Payandan Co.134Bonds in IRR3069Iranian central oil fields Co.135Working capital (NDF)500Oil Turbo Compressor Co.136Working capital (underwriting Sukuk bonds)2194North Drilling Co.137

Working capital - Civil partnership5000Bandar Imam Petrochemical Co.13812000National Iranian Gas Co.(NIGC)139

LGs in IRR450maroon-karan Co.140Working capital3000Oil industry pension fund141LGs in IRR500PIDEC142Working capital(Civil partnership) 2000Marun petrochemical Co.143

Working capital250Dashtestan cement Co.144Working capital730Shirin Assal Co.145Working capital250Soufian cement Co.146Working capital100Sepahan equipment MFG Co.147Working capital1900MAPNA Group148Working capital1000Noori petrochemical Co.149LG40Iranol petroleum Co.150Import LC1000Iranol petroleum Co.151Civil partnership700Iranol petroleum Co.152Civil partnership300Iranol petroleum Co.153

Overdraft200Iranol petroleum Co.154Civil partnership4000Jey Oil refinery Co.155Civil partnership900Jahanpars engineering & construction Co.156Civil partnership20,000Pardis petrochemical Co.157LG500 Jundishapur158

Working capital400National Iranian oil engineering & construction Co.159

Establishing the ceiling of thefacility600Kermanshah petrochemical Co.160

Payment guarantee1295Safa Petro Pasargad CO.161 Establishing the ceiling of thefacility of civil partnership1000Kermanshah petrochemical Co.162

LG1000Shiraz petrochemical Co.163Contractor guarantee800TAM Iran Khodro Co.164


RialsCompanyRow Nature of the Facility

Amount billion

RialsCompanyRow

47


RialsCompanyRow

Fixed capitalWorking capital

1000650Khorasan steel complex Co.165

Working capitalSight LC obligations Deferred LC obligationsFX payment ordersLG

800200200600100

Yaran rolling Co.166

Working capital -Civil partnership90Yazd profile Co.167Working capital -Civil partnership100Shahroud cement Co.168Working capital -Civil partnership280Neysan shargh Co.169Working capital -Civil partnership300Kachoo Co.170

Working capital -Civil partnershipSight LC

18093Samen Pharmaceutical Co.171

(Working capital (civil partnershipContractor Guarantee

100500

The housing and civil engineering company Qods Razavi 172

partnership in working capital50Sugar Co.173partnership in working capital100Fazl Neishabur Co.174partnership in working capital85Kalleh meat products Co175partnership in working capital100Behara food industries Co.176partnership in working capital50Kalleh Co.177partnership in working capital50Fazl Neishabur Co.178partnership in working capital50Electric Khodro Co.179partnership in working capital100Lulehgostar 180


RialsCompanyRow

Nature of the FacilityAmount billion RialsCompanyRow

Payment order (35%)USD 17,000,000Behdis Tejarat Alborz 1

Payment orderEUR 10,000,000Pourateb2

LCEUR104,330,000Port & Maritime Organization3

Working capital-Hand on LCEUR34,000,000Iranian Central Oil Fields Co.4

Working capital- paymentorderEUR 10,000,000Beharn petroleum5

FX GuaranteeEUR 496,000Jahanpars engineering & construction Co.6

FX GuaranteeUSD 700,000,000Jahanpars engineering & construction Co.7

FX GuaranteeEUR 100,000PIDEC8

Establishing Gas condolences RefineryEUR 650,000PGSOC9

Developing South Pars Phases and trans Iran gaspipelines

USD4,000,000,000Developing Saba Kangan Oil and Gas Co.10

Good PerformanceGuaranteeEUR2,800,000Maroon Karan Co.11

FX GuaranteeEUR 100,000PIDEC12

Advance PaymentGuaranteeEUR 2,000,000Iran Oilfield Supply Kish13


48

Research and development: Future study Root finding and improving corporate banking pattern implementation. Root finding and improving commercial banking pattern implementation. Root finding and improving private banking pattern implementation. Universal Banking (opportunities and threats). Business models in banking industry.

EFQM secretariat EFQM establishment project activities in the Bank. Main activities in review and study of head quarters’ performance assessment system.

Future action Research and review credit rating agencies and obtaining board resolution to rate the bank. Acting as secretory of high council of strategy

Resistance economy Holding 2 sessions for resistance economy taskforce presided by the CEO Preparing, delineating and conceptualizing resistance economy proposal Preparing 2 issues of resistance economy analytic report and sending it to the relevant public organizations and private institutions comprising 3 main part of “resistance economy in Bank Mellat”, “specialized reports” and “resistance economy in the media”

Management Devising the nimble knowledge management implementation plan Devising the framework of establishing project management office

Monetary and economic analyses Report on the bill on removing production obstacles and enhancing competi-tiveness of financial system of Iran Assessing the future deposits and loan interest rate from the policymakers point of view Imposed and lifted sanctions: their effects on banking system

49

Comparing financial ratios of the bank versus other local banks during 2010-2014 Holding a series of meeting for analyzing economic situation of the country after lift of sanctions. Assessing the banks performance in FX deposits balance index Assessing and analyzing some of the problems of the banking system Credit rating of bank Mellat Assessing the banks performance in public housing plan Assessing the loss making branches situation Determining the optimal composition of the IRR deposits of the bank Forecasting macroeconomic variables of the Iranian economy in 2016 Proposing implementing the project of optimizing the balance sheet items of the bank Implementing the project of optimizing the assets portfolio of the bank

Human resources Devising visions, mission and objectives of the HR team Deigning, devising, and revising the banks HR questionnaires in the poll tak-ing system


50

Legal environment of the bank

The most important rules and regulations governing operations of the bank include: Resolutions and regulations of the Money and Credit Council The monetary and banking act ratified in 1972The usury free banking act ratified in 1983The commercial code Tax regulations Stock exchanges rules regulations and codes of conductAML actThe annual policy-regulatory package of the CBI Articles of associations of the bank

Preparing the report on “ root finding in HR area problems and providing solu-tions” Participating in the HR satisfaction taskforce Participating in high the council of corporate culture , ethics and the human dignity committee

Operational plan Preparing and submitting the subsidiaries performance report to the internal meeting on march 20th, 2015 Connecting strategic planning to operational Planning Establishing project management office

Strategic planning Devising strategies and plans for international division for 2021 horizon.

51

Social responsibility Participation in public interest activitiesIn addition to purposeful economic activities, Bank Mellat has taken various meas-ures to develop public interest services through gratuitous payments. These activities are as follows: Payment of blood money in lieu of needy prisoners convicted to unintentional crimes. Participation in construction and equipping 63 schools, boarding art schools and handicapped schools.

Participation in the cultural and artistic eventsIn line with its mandate, Mellat Foundation has done in social responsibilities and public interest services including: Commemorating the scientific, cultural and artistic figures. Establishing cultural relations with other countries. Publishing cultural magazines. Holding literature festivals. Holding voluntarily working day. Visiting museums and cultural centers. Participating in environmental campaigns and exhibitions.

Training 2015Training performance in 2015

Course/conference period Training per capita Realized performance (man hour)

36,115 hours 83 hours 1,767,122


52

In line with the policies of the government, the following measures have been taken by the bank on selling FX-travel currency by the end of 2011:Admission of passengers for controlling the documents and registering the request for FX travel in all branches of Bank Mellat, creating counter in 16 domestic international airports in order to pay foreign currency to the passengers, paying FX to respectable pilgrims of Sacred House of God and the holy shrine in FX branches, settling of New Year holidays’ duty and increasing the number of active branches during the New Year and so forth.In line with creating more satisfaction for customers, a unique Internet system for selling FX travel was designed during a 6 months period and put into operation in September 2014.By utilizing this system, respectable pilgrims and passengers can refer to the bank’s web-site and complete the required information and pay the relevant expenses to buy foreign currency electronically. Then, pilgrims of the holy Mecca and the holy shrines can refer to the branches and receive their FX travel, and other passengers can receive FX by refer-ring to the counters at the airport.Significant achievements of utilizing unique system of the Bank’s FX selling: Reducing bureaucracy for passengers. Accelerating foreign currency sale process. Increasing the bank’s capacity in providing applicants with foreign currency. Transparency in the process of the foreign currency selling by presenting accurate expla-nation of the operations steps to passengers. Ever more realization of e-banking by reducing attendance in the branches.

Internet sale system for travel exchange

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Mellat contact center (1556) Mellat contact center was inaugurated in March 2007 in an effort to achieve customer satisfaction, informing, fol-lowing up, and guiding customers in banking services and providing remote services via modern commu-nicative methods. It has both a customer-oriented and service-oriented approach to mechanize communication channels between the Bank and customers.The current communication channels of this center are as follows: Tel. no. 1556 with more than 60 digital phone lines SMS Voice-mail E-mail Fax Q& A system

This center works round the clock and is ready to serve the customers with more than 40 expert staff and currently caters for about 3500 contacts per day.


54

International and foreign currency operations Policymaking Preparing sustainable recovery plan for the international division in the post sanctions era. Cooperating with the delisted industries (food and medicine) by issuing letters of credit, issuing payment orders, as well as collection the petrochemical companies claims. Settling over 300 items, equal to USD 290 million of the previous obligations

related to the sight and deferred LCs out of either bank’s own resources or deposits in order to maintain the competitive edge and brand of the bank.

Performance in the granted facilities Issuing letter of credit for construction of the Khaf wind power plant of Behin Ertebat Mehr Co. Paving the ground to obtain FX allocation approval from the CBI for Bandar Abbas Gas Condensate Refinery project of Persian Gulf Star Oil Company. Participating in granting syndicated loan to Kordestan Petrochemical Company. Preparing financing scheme for Petro Paidar Iranian development Company. Assessing & studying the prospective commercial contracts to grant facilities out of China’s finance facilities. Achieving a 45% share in foreign currency resources, among large commercial banks of the country. Achieving a 39% share in FX export guarantees and 25% in the FX import guar-antees. Handling 3080 payment orders, equivalent to EUR 785 million.

AML activities Removing operational problems in allocating code digit to real-entity, legal-entity, and foreign customers of the bank in accordance with the directive of Iranian and foreign costumers recognition. Updating customers account and blocking account of the deceased customers after receiving confirmation from national organization for civil registration. Implementing Risk-Based-Approach project for rating the costumers. Taking actions required to implement Nahab and Shahab system (Banking electronic

55

identity system). Launching electronic archive project for branches accounting documents. Implementing pilot archive system for costumers’ recognition documents in 10 branches. Participating in assigning the level of customers’ activities taskforce in CBI. Holding the first conference on the role of AML and CFT in international relations for senior managers and managers of the premium branches. Providing and issuing Bank Mellat’s AML statement. Increasing quality and quantity of the daily CTR and STR reports. Implementing control and supervisory checklist sector of the bank’s AML. Earnest endeavor in developing staff AML training programs. Achieving up to 67% of project operation management of the FIU. Enhancing qualitative and quantitative level of the bank’s AML structure.


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In order to establish corporate governance, aimed at increasing efficiency of the board of directors, fulfilling accountability, achieving objectives, transparency and reliable reporting, supervising, observing rules and regulations and controlling the risk of securing resources and allocation them economically, the following structures have been established in the bank by board of directors: Audit committee Internal audit management High committee of risk Risk management Bank Mellat has managed to reduce risk, increase market value, optimally attract and allocate resources via establishing corporate governance, moving towards securing more values for stakeholders, and sustainable growth of deposits by attracting depositors’ confidence.Regarding the predominant role of Risk Management Committee and internal audit committee in steering corporate governance, Bank Mellat has established the aforementioned committees since three years ago to help board of directors in their supervisory role.These committees have played a prominent role in developing strategies and achieving the bank’s objectives enjoying presence of chairman of the board of directors, CEO deputies, elite university professors, banking industry experts, and opinion of the internal and external advisors.Corporate governance structure in Bank Mellat comprises organizational roles such as board of directors, high committee of risk, and internal audit committee. Following up the strategies, increasing efficiency & operations efficacy, complying with rules and regulations, and properly reporting to the shareholders are among achievements of establishing corporate governance in the Bank.

Securities and Exchange Organization

(SEO )

Shareholders and other Stakeholders

Central bank of IranCBI

Board members

Chief executive Officer and Senior Manager

Rating agencies

Independent auditor

Regulatory authorities

Internal Audit Committee

Risk Management high committee

Corporate governance

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Audit Committee was established by approval of the board of directors and its charter was approved on 23 July, 2008. Structure, organization, duties, responsi-bilities, and meetings are clarified in its charter. The main goals and responsibili-ties of Audit Committee are as follows:

Supervising financial reporting process and authenticity of financial statements Establishing the internal controls system. Supervising compliance with rules and regulations Establishing and continuing internal audit functions, Monitoring professional competency and observing independence of the inde-pendent auditor.

Members of the audit committee consist of one of the bank’s board members as the chairman of the committee, one of the bank’s recognized experts, two certified public accountants, one PhD. in accounting out of the bank. Internal audit man-ager acts as the member and secretary of the committee.

Audit Committee convened 40 meetings in 2015, the main measure taken are as follows:

Assessing internal audit report of operational processes of personal and private banking as well as inspection & supervising divisions, together with deposit and services cycle, applying amendments and consequently approving by the committee members. Assessing internal audit reports of operational processes of selected financial systems, regional informatics, commercial banking, training and research and strategic management center, making decisions based on conducting amendments and representing to the audit committee. Assessing and ratifying comprehensive plan of audit in 2015 (banking operations deputy and companies affairs and IT deputy) with supervisory approach, applying amendments and consequently approving by the committee members. Assessing internal audit management reports on latest status of recommendations in the audited divisions, as well as the implemented recommendations. Assessing general plan of internal audit of the banks’ holding companies, subsidi-aries and required structures including; devising charter for audit committee and regulating internal audit responsibilities in order to audit the group’s companies, discussing and exchanging views by the committee members.

Audit committee


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Assessing comparative reports of the changes in direct tax low and transparency on the function of divisions and branches affairs management in line with the changes in low. Negotiating and assessing the independent auditors draft on the bank’s dues from government and government dues from the bank on March20th, 2013 and consequently presenting opinions by committee members. Assessing the problems related to actuary calculations in performing accounting standard (No 4 and 27) and making decision based on certifying calculations about achieving the figures registered in the report. Assessing requirements and preparation for implementing IFRS Assessing resolutions of the cabinet of the ministers on the code of conduct of “removing production obstacles’ act” and determining the functions of each unit of the bank in the act. Assessing the report of internal control deficiencies, executing and supervising payment for promotion plan, negotiation and exchange of views and consequently approving by committee members. Assessing financial statements draft ended on March 20th 2014, holding various meetings with independent auditors on applying amendments and presenting audit committee points of view. Assessing proposals of the ABC implementing executers in the bank. Assessing operational program reports of internal audit management for 2016 including bank processes, holdings, IT, discussing and exchanging views, consequently approving by the committee members. Assessing draft of midterm financial statements of the bank (independent

auditor’s report) for September22 th, 2015 in cooperation with financial division staff and presenting comments by committee members.

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Within the operational deputy and company’s affairs, seven divisions and bank operating cycles were audited. A number of audit points in the area under inves-tigation were 314 items in which 652 recommendations were presented in order to solve the problems, upgrade the internal control structure and improve the ef-ficiency. Within the IT deputy area, two IT projects were audited and the report was ap-proved in the audit committee and the board of the bank, these missions led to identifying 24 findings and presenting 79 recommendations in order to upgrade internal controls. Following up performing of the audit recommendations of the units under inves-tigation in monthly intervals and sending the report to the same unit and audit committee management. This led to termination of 551 audit recommendations until march20th 2016. Executing special audit missioned by the audit committee, deputies council and board of directors including universal banking problems report, commenting on AML regulations and statement, assessing career path of specialized professions, assessing bank’s dues from Mashhad municipality, assessing and following up the unsettled figures of heading 1523 via correspondents with area managers, report of administered funds of the national railway company held with the bank’s Istanbul branch, report of registration process of the uncollectable L/G’s, assess-ing prototype software of delay payment and issuers liabilities for participation bonds. Heading the taskforce for amending and improving Chakavak system and its implementation in the bank along with MQ system controls by holding over 35 meetings. Participating and following up the affairs related to transferring facilities from SAEE system to core banking by participating in the expert task force. Assessing the audit reports draft, management letter, etc. to present to the audit committee. Advising different units of the bank on their day to day operations. Preparing monthly loans & debts report of the inter related parties and submitting it to the CBI.

Internal audit management performance


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Governance structure of the risk management

Risk Governance as an important part of the bank’s corporate governance has a significant role in implementing risk management framework in the bank and assists the board of directors and senior managers of the bank devising strategies based on covering the risks. Risk Governance structure in the bank has been formed based on international stand-ards and models. As its main infrastructure, risk Management deals with identifying, processing, assessing, reporting, monitoring and reducing the risk in cooperation with other departments of the bank. Risk Governance structure comprises organizational roles including board of directors, risk management committee, audit committee, and risk management division that handles policies, methodologies and rules, monitors systems to reasonably ensure efficiency of the organizational management risk.Risk management in the bank requires participation of a vast number of staff and or-ganizational units each of which performing different functions and have responsibil-ity as parts of defensive layers of the bank’s risk management against probable risks.

Risk management committeeRisk management committee is one of the most important pillars of the risk govern-ance in the bank. In order to help board of directors, risk management committee is acting on managing organization risks such as:

Emphasizing on culture building in risk management Assessing situation of the bank’s risks Assessing reports presented on main risks involved in the bank’s operations Informing the board of major risks faced by the bank Reasonably assuring of effectiveness of risk management system Assessing efficiency of risk management methodology and proposing the risk ap-petite and tolerance to the Board.

In line with executing its duties, risk management committee managed to hold 9 meetings and issued 24 resolutions (including 38 recommendation) in 2015.

Risk management division According to the bank’s new approach based on “a bank with global thinking” and inevitability of establishing correspondent relations with the international banks and financial institutions, the standards and guidelines of Basel committee, define the

Risk management

61

criteria for executing risk management in the bank. Risk managers increase value creating capacity in the bank by mitigating risks and creating a balance between stra-tegic objectives and future risks, being aware of the uncertainties and internal and external organizational risks. Risk management division helps the board of directors in achieving the objectives and creating added value by identifying, assessing, ana-lyzing, proper reaction and continuous monitoring major risks that adversely affect achievement of the bank objectives. The risk management division as the second defensive layer against the risks has independent structure and manages related risks of the bank’s operations by establishing different units of risk management including: credit risk, liquidity risk, market risk, operational risk, IT risk and compliance risk.

Risk Management

Financial and market risk deputy

Ope

ratio

nal r

isk

unit

Com

plia

nce

risk

unit

IT R

isk

unit

Mar

ket r

isk

stra

tegy

uni

t

Fina

ncia

l and

liqu

idity

risk

uni

t

Cre

dit r

isk

unit

Operational risk deputy

The above structure enjoys cooperation of the liaison officers of the risk settled in different departments in identifying risks associated with processes, individuals and internal systems.

Total resultant of liquidity riskResultant of the Bank’s liquidity risk index was equal to 1.90 in 2014 and 1.81 in 2015 which indicates 4.7 percent decrease in liquidity risk. In spite of the liquidity problems in banking system in 2015, liquidity risk in Bank Mallet could optimally be mitigated by continuous management.


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Value at risk

The Bank’s portfolio management in 2015 was such that despite of 11.64 percent growth in granted facilities (except the redeemed bonds) the value at risk for the credit portfolio has decreased 2.81 percent over the previous year.

Total resultant of liquidity risk

2014 2015

-% 4.7

1.90 1.81

Hedging value at the risk in credit portfolio

The scope of coverage in value at the risk in credit portfolio in 2015 increased 9.87 percent versus the preceding year and reaching 53.65 percent. Covering 53 percent of the Value at the risk by doubtful loans provisions, illustrates desired level of credit risk coverage in the Bank.

902 1007

14.20% 13.8%

11.64%

2.81%

Hedging value at risk in credit portfolio

2014 2015

63

Operational risk management

In 2015 by deploying the index method, the core capital required for covering op-erational risk with a 7.5 percent increase over the previous year was estimated at IRR 9,482 billion. The bank managed to increase its core capital by 11.2 percent over the previous year. So core capital of the bank increased 3.8 percent more than that required for covering operational risks.

2014 2015

% 9.87

Core capital required for covering operational risks

48.83% 53.65%


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65

Part ThreeReport of the Independent Auditor, Legal Inspector& Financial Statements


66

EmblemI.R. of Iran

Ministry of Economic Affairs and Finance Audit Organization

Report of Independent Auditor & Legal Inspector to Ordinary General Meeting of the Shareholders

Bank Mellat (Public Joint Stock Co.)

Report of Independent Auditor & Legal Inspector To Ordinary General Meeting of the Shareholders

Bank Mellat (PJSC) Report on the Financial Statements

1. Consolidated balance sheet of the Group and Bank Mellat (PJSC) on March20 th, 2016 and consolidated statements of profit and loss and com-prehensive profit and loss and cash flow of the group and bank for the finan-cial period ended on the said date, together with accompanying Explanatory Notes 1-59 have been audited by this Organization.

Responsibility of the Board of Directors in Respect of Financial State-ments2. The Bank’s Board of Directors is responsible for preparation of finan-cial statements according to the accounting standards. Such responsibility includes design, exercise and maintenance of internal controls related to preparation of financial statements, in such a manner that such statement are free from material misstatement, whether due to fraud or mistake.

Responsibility of the Auditor and Legal Inspector3. Our responsibility is to express our opinion on these financial statements based on our audit and in accordance with Auditing Standards. The men-tioned standards enforce that we comply with ethical requirements and plan

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and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidences about the amounts and other information disclosures in the financial statements. The deployed procedures depend on the auditor’s judgment, including as-sessment of the risks of material misstatement of the financial statements, whether due to fraud or mistake. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate to the circumstances, but not for the purpose of express-ing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.We believe that the audit evidence we have obtained is adequate and ap-propriate to provide a basis for our expressing qualified opinion concerning the consolidated financial statements of the group and the bank.

Additionally, this organization is responsible for acting as the legal inspec-tor and reports to the Ordinary General Meeting of the shareholders the required cases and also any non-compliance of bank with due legal require-ments set out in the monetary and banking regulations, usury-free opera-tions, amendment of Commercial Law, as well as provisions of the Articles of Association of the Bank.

Bases for Expressing Qualified Opinion4. By virtue of Article (29) of the Articles of Association of the Banks’ Staff Re-tirement & invalidity Fund, the current value of the Fund’s future obligations had to be reviewed every three years and commitments of each member bank had to be supplied by the approval of General Meeting of the Fund. In this regard, a reserve of IRR 11,164 billion was considered in the accounts in the past years, and IRR 3,700 billion of the reserved amount was paid. Nevertheless, for the 2011-2013 three-year period, future actuary obliga-tions (except for net amount of IRR 435 billion) and also the actuary obliga-tions calculated on the basis of resolutions adopted in the Meeting held on 05 July, 2014 by the specialist of the Fund’s Trustee Board, as notified to the Fund’s Trustee Board’s Members, have been declared as IRR 30,400 billion. Considering the bank’s claim that its share in the actuary obligations


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is not clear by the date of privatization (March20 th 2009), it is not possible for this audit organization to determine the required adjustments in this regard.

5. As detailed in the explanatory notes (9) and (10), a part of customers’ non-current liabilities amounting IRR 82,600 billion (preceding year: IRR 51,975 bil-lion) has been restructured based on new terms and conditions and have been transferred to the current debt category, while identifying revenue for such procedure. Reviews made on the status of receivables from such customers indicate failure in collection of total debts at the maturity dates. Additionally, the provisions of Circulars 2823MB, dated February24 th, 2007, 91/21270, dated April19th, 2012 and 93/337180, dated March 05 th, 2015 issued by the Central Bank of I.R. of Iran concerting breaking down and classification of granted loans and non-return of provisions for the Moratorium loans and in some cases, collection of at least 20% of total debt (principal and interest) and considering the required reserve for doubtful debts have not been complete-ly complied with. Considering the above mentioned circulars and accounting standards, although it is essential to modify the accounts, it is not possible for this organization to determine the exact amount.

6. The entry of receivables from the government (explanatory note 8 of finan-cial statements), including IRR 3,530 billion, are mainly related to the actuary cost prior to privatization of the Bank, loans from ABC Bank, Naghadeh Azar Ghand Co. and other receivable for which no documentation, indicating they are guaranteed by the government, has been provided to this Organization; hence, the authenticity of classification of the above-said items and amount of IRR2,600 billion calculated profit as a part of dues from the government has not been proved to this Organization. Furthermore, the bank has reflected the interest of the receivables from the government based on the explanatory notes(8-6) however, due to calculating the deferred interest of the receivables from the government for the preceding years about IRR 16,656 billion (includ-ing IRR 7,793 billion for the deferred interest of the current financial year)has been over-reflected in the accounts. It is noteworthy that the calculated interest rate by the bank has been according to the transactional contracts for each year, for which we have been provided with no documents indicating the gov-ernment accepting such rates.

Expressing a Qualified Opinion to the consolidated statements of Group & Bank7. In the opinion of this organization, except for the effects of Clauses (4) to (6), the above mentioned financial statements fairly represent, in all material

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respects, financial position of the group and Bank Mellat (Public Joint Stock Co.) as at March20 th, 2016, their financial performance and their cash flows for the year ended on the mentioned date in accordance with Accounting Standards.

Emphasis of a Matter The opinion of this organization is not qualified for the following provisions 8 to 10.

8. As it has been reflected in the explanatory notes (24) and (25), on the strength of the decision of the Tax Disputes Settlement Board, indicating ac-cepting the cost of doubtful accounts, the Bank has recorded tax reserves for the years 2011 through 2013 (irrespective of issuance of final and as-sessed tax notices) in 2010, assuming acceptance of such cost. It is to be noted that bank has objected to the assessment and final tax notices issued in the preceding years, and this is being followed up through dispute settle-ment boards and tax supreme council; nevertheless, no decision has been notified up to date of this report. Meanwhile performance tax of the respec-tive year has been reflected in the accounts according to the expressed revenue regardless of unacceptable tax expenses. Any confirmation of the adequacy of the mentioned reserves would be subject to settling disputes with the tax authorities.

9. The entries of granted loans and receivables from other entities and other assets and receivables from the government (explanatory notes 10 and 16 of financial statements including total amount of IRR7,851 billion receivable from Tehran municipality, Tehran subway Co. Pars wagon manufacturing Co. (affiliated to municipality and municipality Participation bonds which despite their being past due, have been reflected in the current class on the strength of agreement dated April10 th, 2012 with Tehran Municipality conducted reviews indicate failure in total execution of the provisions of the mentioned agreement but no reserve has been considered in this regard. Meanwhile the deferred interest of the preceding years and current year amounting to IRR 2,299 billion are being calculated and considered in the income accounts. By considering the above explanations, collection of the abovementioned amounts, depends on finalizing the disputes with Munici-pality.

10. As detailed in the Explanatory Note (6-2) according to the Circular


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60/1015, dated December07 th, 2013 issued by the Central Bank of I.R. of Iran, Bank Mellat claiming sum of IRR 1,081 billion from the Central Bank of I.R. of Iran. In this regard in the preceding financial year amounting IRR 12,792 and also in the respective period amounting IRR 5,552 billion reve-nue due from conversion is recognized the probability of future economic in-terest flow and also identifying financial effects due from above FC receiva-bles on financial statements, is related to finalizing of that with Central Bank (explanatory note 6-2 and 17-3 of financial statements), it is noteworthy that in this regard the Central Bank at the beginning of 2012 withdrawn net amounting IRR 2,537 billion out of the Current Account of Bank Mellat(as detailed in the explanatory note 6-1 of financial statements).

Report on other Legal and Regulatory Requirements of Bank Mellat (PJSC)Report on other Responsibilities of Legal Inspector11. Instances of failure in observing some of the monetary rules provisions and banking and supervising circular letters and approvals on banking op-erations and indispensable circular in 2015 have been notified to the Central Bank of Iran through a separate letter No958148 dated July th 13, 2016 by this Organization.

12. According to the available information, the amount of embezzlement from the Bank during the reported financial year amounting IRR 602 billion(preceding year amounting IRR 276 billion), and the collected amounts from the mentioned embezzlement was IRR 392 billion up to the date of this report.

13. Detailed statement of calculations related to difference of final profit and on-account investment deposits account disclosed in the Explanatory Note (40) of the financial statements have been audited in compliance with the provisions of Circular No. 126331, dated March 09 th, 2009 issued by the Central Bank of Iran. In this respect, no cases of non-compliance with the provisions of the mentioned Circular were found. It is noteworthy that Bank Mellat has mentioned the amount of IRR 18,390 billion surplus of paid profit to the shareholders.

14. The entry of other receivables accounts (explanatory note 16 financial statements) including amount of IRR 20,958 billion as profit of the shares receivable from invested companies is related to the preceding years which

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has not yet been received.

15. The FC Core Banking System subject of the article19 fifth section of technical-supervisory package of the CBI in 2010, this report has been not fully executed in banking system yet and leads to failures in reconciling the items in transit. Also the entry items in transit (explanatory notes)

16. Defaults in providing the legal obligations set out in the amendment to the commercial law and bank’s Articles of Associations are as follows:16-1. The board of directors minutes of the meeting in order to due diligence has not been received by this organization.

16-2. We draw attention of the shareholders’ general meeting to the financial effects of materials set out in the clauses of this report and also the subject reflected in clauses 16-4-5:

16-3. Follow-ups made by the Bank for duties assigned at the ordinary gen-eral meeting dated July 21th, 2014, the shareholders reached no final result concerning Clauses 4, 5, 6, 7, 8 and 10 of this report.

16-4. provisions of the banks’ association is failed to comply with some of the following issues: 16-4-1 Articles 7 concerning permitted max of the Bank’s shares ownership directly or indirectly with legal entities, max 5%. (Tamin Atiyeh Fund of Bank Mellat 6.45%). 16-4-2 Article 11 concerning failure of purchasing Bank’s Shares by the bank and subsidiaries which have control or influence on Bank (Mellat financial Group and Behsaz Mosharekathaye Mellat and Behsazan Co.

16-4-3 Article 57 and note 1 of the article 81 and article 58 do not have relation with executive possession from the majority of the members of the board of directors, especially CEO of the bank and number of the members of the board of director during the year.

16-4-4 Article 61 and 62 concerning election notice of the board of directors by CEO is published on the newspaper with wide circulation 6 month before holding of annual meeting. Also the specifications of those who have regis-tered their name 3 moth before holding annual meeting have been sent to


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the CBI in order to be approved.

16-4-5 According to clause 115 of Association, if capital adequacy is under 8 percent, only 10 percent of the annual profit will be distributed 17.We reviewed the transactions set out in the Explanatory Note (58-1) re-ported as the total transactions made subject to Article (129) of the amend-ment to the Commercial law, as, during the reported financial year, as noti-fied to our Organization by the Board of Directors. Concerning the mentioned transactions, with respect to non-access to the board members minutes of meeting, to observe based on obtaining authority from Board of Members and absence of the beneficiary manager from voting were observed. Fur-ther, this organization found no evidences indicating such transactions were conducted in improper trading conditions and irregular trend of the banking operations.

18.We reviewed the board members’ report concerning the operations and general status of the bank, subject to Article (232) of amendment to the Commercial law, which was provided to be presented to the Shareholders’ Ordinary General Meeting. To this end, we found no material instances in-dicating discrepancy of the information set out in the mentioned report with the documents presented by the board of directors.

Report on other legal and regulatory responsibilities of the Auditor

19.Executive Directive of disclosing information of the companies listed on the TSE also the guidelines on internal disciplinary controls of the issuers listed on the Securities and Exchange Organization, set out below, have not been observed: 19-1. providing and presenting information, reports and financial statements in various intervals during the reported year on due dates. 19-2. presentation and providing completely of financial statements of the bank in accordance with sample presented by the Securities and Exchange Org.19-3. Provisions of Article (10) about the head of the Audit Committee with financial and none executive board members.19-4. the shareholders equities to total assets ratio is at least 30 % (in the bank under assessment is 4.6%).

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20. Investments and partnerships entry (Explanatory Note 13 of Financial Statements), includes IRR 5,704 billion as the cost price of investment in companies’ shares; the required information in consideration of the status of the mentioned investments was not provided to this organization.

21.in execution of Article (33) of the Executive Directive of Anti-Money-Laundering by the auditors, we reviewed observance of the provisions set out in the mentioned law and the relevant by-laws and directives, as per the checklists notified by the relevant authority and audit standards is being as-sessed by this organization. Despite establishment of anti-money launder-ing unit at bank’s network and carrying out some measures to this end, the provisions of the mentioned law and the applicable directives have not yet been fully executed in the banking system.

Date: July 17, 2016

Audit Organization

Mr. Mohammad HosseinMr. Bahram Sadoghianzadeh


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Bank Mellat (Public Joint Stock Co.)Explanatory Notes to the Financial Statements of the Group & Bank

For the Financial Year Ending on March 20th, 2016

Securities and Exchange OrganizationPlease find attached consolidated financial statements together with financial statements of Bank Mellat concerning financial year ended on March20th, 2016. Constituents of the financial statements are as follows:

A-Basic Consolidated Financial Statements of the Group: •Consolidated balance sheet •Consolidated profit and loss statement •Consolidated retained earnings (loss) turnover •Comprehensive consolidated profit and loss statement •Consolidated cash flow Statement B-Basic Financial Statements of the Bank:•Balance sheet •Profit and loss statement •Retained earnings (loss) turnover •Comprehensive profit and loss statement •Cash flow Statement C-Explanatory Notes:•Generalities •Accounting convention •Summary of significant accounting policies •Notes to the financial statements & other financial information Consolidated financial statements of group and financial statement of bank Mellat were prepared on the basis of accounting standards and approved by Board of Directors of the Bank on July 13 th, 2016.

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SignaturepositionRepresentative of legal entitiesCEO and board members

SignedCEO-Hadi Akhlaghi Feiz Asar

SignedChairmanKouzestan Edalat InvestmentMohammad Bigdeli

SignedBoard MemberSaba Tamin invetmentAli Rastegar

SignedBoard Member Islamic republic of Irangovernment

Kourosh Maadelat

SignedBoard MemberEdalat Fars InvestmentHasan Rousta

SignedBoard Member-Hamid Tajik Baghkhavas


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Bank Mellat (PJSC)Consolidated Balance Sheet as at March 20th, 2016

Restated March 20th, 2015

Million Rials

March 20th, 2016 Million Rials

Note Assets

22,056,52925,279,6825Cash157,503,810200,545,8416Dues from the central banks104,338,933217,180,9577Due from banks & credit institutes53,212,71867,470,6758Dues from the government

217,912,671264,506,2139Loans and advances to the public sector

630,647,469793,275,24910 Loans and advances to other parties23,864,81515,290,90311 Dues for L/Cs and time drafts9,174,03411,207,21412Participation bonds & the like

37,662,54045,959,34113Investments & partnerships47,163,76147,862,23514Tangible fixed assets

3,469,6585,554,85515Intangible assets

63,396,24393,345,78816Other assets1,370,403,1801,787,478,955Total Assets

55Contingent liabilities:

49,953,64740,166,498Liabilities for L/C’s

142,536,792143,012,052Liabilities for L/G’s

269,514,606310,747,865Other liabilities

107,064,266131,016,861Managed funds & the like

569,069,312624,943,276Total

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75,275,08181,982,980Total shareholders’ equity of the parent company

2,002,9572,149,636 34Minority interest77,278,03884,132,616Total shareholders’ equity

1,370,403,1801,787,478,955Total liabilities & shareholders’ equity 55Contingent liabilities:

49,953,64740,166,498Party to liabilities for L/Cs

142,536,792143,012,052Party to liabilities for L/G’s

269,514,606310,747,865 Party to other liabilities107,064,266131,016,816Party to managed funds & the like

569,069,312624,943,276Total



Million Rials

March 20th, 2016Million Rials

Note Liabilities & Equities

144,353,255170,231,43918Dues to the central banks55,302,28981,929,55119Dues to banks & credit institution

203,969,461255,278,50720Sight deposits56,831,76863,737,21121Saving deposits & the like

622,647,090862,637,90722Time investment deposits43,729,12942,751,30323Other deposits

5,327,3901,861,82124Payable tax91,533,636156,974,01125Provisions and other dues21,990,08315,523,75926Acceptances & endorsements

1,764,658632,02127 Payable dividend

8,801,8586,407,80228Severance provisions

39,268,58042,986,951 17Items in transit

1,293,125,1421,703,346,339Total Liabilities

Shareholder’s Equity:40,000,00040,000,000 29Capital (1,575,017)(2,003,242) 30 Shares of parent company owned by the

subsidiaries16,783,32029,741,498 31 Reserves

420,484420,484 32 Subsidiaries capital out of revaluationsurplus

3,580,4063,419,795 33 FC translation difference of ForeignBranches statements

16,065,88710,404,445Retained earnings (loss)


78

Bank Mellat (PJSC)Consolidated Profit & Loss Statement



Million Rials

March 20th, 2016Million Rials Note C- Expenses

(27,671,234)(40,403,751)44Administrative & general expenses

(5,122,150)(703,397)45Doubtful loans expenses(15,297,982)(16,029,376)46Financial expenses(5,715,092)(565,505)47Other expenses

(53,806,458)(57,702,029)Bank’s total expenses

16,306,08312,083,819pre-tax profit

(1,463,148)(1,212,963)less:tax

14,842,93510,870,857Net Profit

164,248120,789Minority interest

382278Basic earnings per share – IRR (with a capital of IRR 40,000 billion)


Million Rials

March 20th, 2016Million Rials Note B- Non-Joint Incomes

34,036,99722,971,47341Profit & late payment charges received

18,372,56712,248,84342commission received3,525,61724,948,74843Other incomes

55,935,18160,169,064Total non-joint income

70,112,54169,785,851Bank’s total income


Million Rials

March 20th, 2016Million Rials Note A- Income from Joint Activities

87,519,297120,924,62235Profit from granted loans30,451,84840,896,58936Profit from Sales of goods & services19,044,86720,570,51037Profit from investments and deposits

137,016,012182,391,721Total joint incomes

Less:(27,427,031)(37,935,181)38Cost price of goods and services(95,411,621)(134,839,753)39On-account profit of investment deposits

(122,838,652)(172,774,934)profit - depositors’ share14,177,3609,616,787Profit– bank’s share and spread

79


Million RialsMarch 20th, 2016

Million Rials

Note

14,842,93510,870,857Net profit(loss)

20,771,69220,246,158Retained earnings at beginning of the year

(2,064,434)(3,998,481) 48yearly adjustments

18,707,25816,247,676Adjusted retained earnings at beginning of the year

33,550,19327,118,533

(13,200,000)(3,600,000)Aproved profit

20,350,19323,518,533 Attributable profit

Profit allocation:

(4,102,517)(2,968,847)Legal reserves

(0)(10,000,000)Other reserves-capital adequacy reserve

(4,102,517)(12,968,847)

16,247,67610,549,686 Retained earnings before deductingMinority interest

(181,790)(145,241)Minority interest

16,247,67610,404,445 Retained earnings at the end of theyear


Turnover of Consolidated Retained Earnings (loss) Account


80

Bank Mellat (PJSC)Consolidated Comprehensive Profit & Loss Statement

For the Financial Year Ending on March 20th, 2016Restated


March 20th, 2016Million RialsNote

10,870,85714,842,935Net profit

0113,71732 Surplus of revaluated tangible fixedassets

(160,611)(156,349)Difference due to FC conversion of foreign branches

10,710,24614,800,303Comprehensive profit of the financial year

(3,998,481)(2,064,434)48yearly adjustments

6,711,76512,735,869 Comprehensive profit (loss) recognized as of the date of preceding financialyear

76,361141,404 Minority interest from comprehensive profit of financial year

81

Bank Mellat (PJSC)Consolidated Cash Flow Statement

For the Financial Year Ending on March 20th, 2016Restated


March 20th, 2016Million RialsNote Operating Activities

18,004,42121,361,24751Net cash in/outflow from operating activities

Return on investments & paid profit inconsideration of financing

(11,025,168)(4,169,863)Paid dividend

(534,198)(564,011)Dividend paid to minority shareholders

(11,559,366) (4,733,874)Net cash out-flow for investments return & paid-up profit out of financing

Income Tax

(4,933,882) (9,111,432) Paid-out income tax

Investment Activities

(5,922,063)(3,873,395)Payments for acquiring tangible fixed assets

1,178,6232,202,116Funds received for disposing tangible fixed assets

(318,134)(2,094,478)Payments for acquiring intangible fixed assets

04,836Funds received from disposing intangible assets

(5,061,574) (3,760,921)Net cash outflow for investment activities

(3,550,401) 3,755,020Net cash outflow prior to financing activities

Financing Activities

(12,481)0 Net repayment of loans from banks abroad

49,134191,124 loans received from other banks by thesubsidiaries

168,024428,225 Changes in parent company’s shares owned bysubsidiaries

204,677619,349Net cash in-(out)flow due to financing activities

3,345,7244,374,36952 Net increase(decrease) in Cash

26,214,89522,869,17152cash at the beginning of the year

22,869,171 27,243,54052 Cash at the end of the year

3,237,1853,817,80453Non-cash transactions


82



Restated March 20th, 2015Million Rials


Note Assets

18,790,19415,666,7085Cash

200,545,841157,503,8106Dues from the Central Bank

217,801,509104,903,7427Dues from banks & credit institutions

67,470,67553,212,7188Dues from the government

264,506,213217,912,6719Loans & advances to public sector

811,469,128645,898,63210Dues from other persons

15,290,90323,864,81511Dues for LCs & time drafts

9,630,4186,905,14212Participation bonds & the like

25,383,77924,859,67013Investments & partnerships

41,751,68741,980,72714Tangible fixed assets

5,103,5433,020,42615Intangible assets

96,833,73555,992,35416Other assets

1,774,577,6251,351,721,415Total Assets

55Contingent liabilities

40,166,49849,953,647Liabilities for L/Cs

143,012,052142,536,792Liabilities for L/G’s

310,747,865269,514,606Other liabilities

131,016,861107,064,266Managed funds & the like

624,943,276569,069,312Total

83



Restated March 20th, 2015Million Rials


Note Liabilities & Equities

170,231,439144,353,25518Dues to the central bank

80,678,01254,846,29419Dues to banks & credit institutions

257,337,335205,141,16420Sight deposits

63,737,99856,831,83521Saving deposits & the like

870,288,480624,831,52022Time investment deposits

27,916,08332,161,502 23Other deposits

1,448,7504,669,03124Payable tax

156,330,81190,119,66225Provisions & other dues

15,523,75921,990,08326Acceptances & endorsements

68,01173,81127Dividend due

8,472,6636,172,66328Severance provisions

42,986,95149,268,58017Items in transit

1,695,020,2931,280,459,402Total Liabilities

Shareholder’s Equity:

40,000,00040,000,00029Capital

27,679,69015,240,22931Reserves

1,583,1252,077,26533Difference due to conversion of financial statements of branches abroad

10,294,51713,944,520Accumulated profit

79,557,23271,262,014Total shareholders’ equity

1,774,577,6251,351,721,415Total liabilities & shareholders’ equity

55Contingent liabilities

40,166,49849,953,647Party to liabilities for L/Cs

143,012,052142,536,792Party to liabilities for L/G’

310,747,865269,514,606Party to other liabilities

131,016,861107,064,266Party to managed funds & the like

624,943,276569,069,312Total


84

Bank Mellat (PJSC) Profit & Loss Statement


March 20th, 2015March 20th, 2016Note

Million RialsMillion RialsA- Income from Joint Activities88,403,023122,587,44535Profit from granted loans29,678,54322,898,40537Profit from investments and deposits

118,081,566145,485,850Total joint incomesLess:

(94,942,742)(136,014,670)On-account profit of investment deposits(94,942,742)(136,014,670)39profit – depositors’ share

23,138,8249,471,180profit – bank’s share and spreadB- Non-Joint Incomes

27,097,43922,979,07941Received profit & late payment charges

18,371,27012,247,85542 Received commission1,934,83625,049,50343Other incomes

47,403,54560,276,437Total non-joint income70,542,36969,747,617Total income

C- Expenses(27,062,698)(39,483,390)44Admin, & general expenses

(4,960,343)(1,005.803)45Doubtful loans expenses(13,673,439)(15,588,783)46Financial expenses

(5,668,293)(490,523)47Other expenses(51,364,773)(56,568,499)Total expenses

19,177,59613,179,118Pre-tax profit(874,140)(789,661)Less: Tax

18,303,45612,389,457Net Profit

458310Basic earnings per share – IRR (with a capital of IRR 40,000 billion)

Turnover of retained earnings(loss) account

18,303,45612,389,457Net profit(loss)14,837,77618,806,786Retained earnings at beginning of the year(2,360,133)(4,862,267)Yearly adjustments 48 12,477,64313,944,520Adjusted retained earnings at beginning of the year30,781,09926,333,977

(13,200,000)(3,600,000)Approved dividend17,581,09922,733,977Attributable profit

Profit allocation(3,636,579)(2,439,461)Legal reserves

(0)(10,000,000)Capital adequacy reserve(3,636,579)(12,439,461)13,944,52010,294,517Retained earnings at the end of the year

85

Bank Mellat (PJSC) Profit & Loss Statement


Restated Year ended onMarch 20th, 2015

Million Rials

Year ended onMarch 20th, 2016Million Rials

Note

18,303,45612,389,457Net profit

177,666(494,140) Foreign currency translation difference of foreign branches

18,481,12211,895,317Comprehensive profit of financial year

(2,360,133)(4,862,267)48Yearly adjustments

16,120,9897,033,050Comprehensive profit (loss) recognized from the preceding financial year


86

Bank Mellat (PJSC) Cash flow Statement

for the financial year ending on March 20th, 2016

March 20th, 2015March 20th, 2016Note

Million RialsMillion RialsOperating Activities

15,939,14622,104,24151Net cash in/outflow from operating activities

Return on investments & profit paid for financing

(13,155,544)(3,605,801)Paid out dividend

(13,155,544)(3,605,801)Net cash outflow from profit paid for financing

Income Tax

(3,847,063)(8,417,436)Paid income tax

Investment Activities

(3,487,160)(4,249,406)Funds paid to acquire tangible fixed assets

801,640(52,222)Funds received from disposing tangible fixed assets

0(2,083,118) Funds paid for acquiring intangible assets

(2,685,520)(5,806,302)Net cash in/outflow for investment activities

(3,748,981)4,274,702Net cash in/outflow before financing activities

Financing Activities

(12,481)0 Repayment of principal amount of loans

(12,481)0Net cash inflow for financing activities

(3,761,462)4,274,70252 Net (increase) decrease in cash

20,240,81116,479,34952Cash at the beginning of the year

16,479,34920,754,05252Cash at the end of the year

87

Bank Mellat (PJSC)Consolidated Financial Statements of the Group & Bank


1- History of the Bank’s Activities1-1GeneralitiesThe group includes Bank Mellat (Public Joint Stock Company) and its subsidiaries. by virtue of the resolution of General Meeting of Banks dated May 19, 1979, Bank Mellat was established on 22 July, 1980 through merger of Banks: Tehran, Omran, Daryush, Iran International, Farhangian, Iran Insurance, Pars, Foreign Trade, Iran and Arab, Cooperative Credit and Distribution, and registered at the Companies Registrar Office under No, 38077, and on the strength of the decision taken at the Extraordinary General Meeting of Banks, held on April 06, 2008 and Enactment No, T/68985, dated July 24, 2007, approved by the Board of Ministers, the legal entity of the Bank was converted to “Public Joint Stock” and on February 11, 2009 it was the first public bank listed on the signboard of Tehran Securities Exchange Market, in the section of banks and credit institutions and other public monetary institutes, and on February 19, 2009, 5% of its shares were offered at the Stock Market to discover the price; and currently, 17% of its shares is owned by the Government, 30% is owned by Provincial Investment Companies, known as Justice(Edalat) shares, and the remainder is owned by the private and non-governmental sectors.

1-2. Major ActivitiesAccording to provisions of Article (2) of the Articles of Association approved in 28 October 2014 and registered on 12 January 2014 in Companies Registrar Office, the bank’s activities include engagement in banking operations under framework of the Iranian monetary and banking rules and regulations and its subsidiaries are mainly engaged in banking, leasing, investment, exchange, design and production of computer software and provide maintenance services concerning produced soft-ware, as detailed in Note (13-3).

1-3. Number of the Branches: The Bank’s branches are as follows:

March 20th, 2015March 20th, 2016BRANCHES290289 Branches in Tehran Province

1,3031,292 Branches in other Provinces99Branches in Free Trade Zones44 Foreign branches

1,6061,594 Total


88

1-4. Number of Employees: Average number of permanent and temporary staff during the financial period is as follows:

2. Accounting Convention 2-1. Basis for Preparation of Financial Statements Consolidated financial statements of the group and Bank Mellat have basically been prepared under historical cost convention, and current values have also been used when necessary.

3. Consolidation Bases3-1. consolidated financial statements were resulted from consolidation of the Bank’s financial statements and those of subsidiaries subject to consolidation, after deleting in-group transactions and balances and unrealized profit and loss of transactions among them. The subsidiaries have been disclosed in the Note (13-3) and their financial year ends on of March 20th (Except Mellat Bank Armenia). 3-2. Concerning companies acquired during the period, the results of operations thereof as of the date whose control is effectively transferred to the parent company and concerning assigned subsidiary companies, the result of operations until the date of assignment are recorded in the consolidated profit and loss statement.3-3. Shares of the parent company acquired by the subsidiaries are recorded at the cost price in the accounts and are reflected as the equity reducer under the entry of “parent company’s shares owned by the subsidiaries” in the consolidated balance sheet.

4. Summary of Significant Accounting Policies 4-1. Inventory Inventory is evaluated at ‘’minimum cost price and net sales value’’ of each single item. If the cost price is greater than the net sales price, then, the difference will be recognized as the impaired retained value of the inventory. Cost price of inventory is determined as follows:

March 20th, 2015March 20th, 2016DESCRIPTIONA) Bank:

2,8442,553Head Office4,3044,142Tehran Province Branches

15,33014,647Branches of Other Provinces22,47821,342Total6,3517,369B) Subsidiaries

28,82928,711 Total

Applied methodsExplanationMoving weighted average and FIFORaw materials and packaging

Weighted averageGoods in progressWeighted averageFinished goods

Specific recognition & Moving weighted averageSpare parts & accessoriesFIFOInventory at hotel reception halls

89

4-2. Investments

4-3. Tangible Fixed Assets4-3-1. tangible fixed assets, except for the items set out in the Note 4-3-2, are reflected in the accounts on the basis of cost price. Renovation and major repairs expenditures that may cause significant increase in capacity or useful life of the fixed assets or basic renovation in return qual-ity thereof are considered as capital expenditure and will be depreciated during remained part of useful life. Maintenance expenses and slight repair charges spent from standards of basic assessed operations of assets for maintenance and repair of expected economic resources of commercial unit shall be considered as current expenses and will be recorded in the profit and loss statements of the period, when realized.

4-3-2. In execution of Article (62) of Third Development Plan, the land and building of the Bank on March 20th, 2005 was recorded in the statements on the basis of revaluated price and for IRR 11,543 billion, and the surplus amount of the mentioned reassessment amounting IRR 10,637 billion was recorded in the account of “government’s increased capital in the bank” according to the mentioned regulations.

Evaluation methodConsolidation methodParent companyLong-Term Investments:

Cost price (Less: accumulated impairment Consolidation Investment in subsidiaries subject

to consolidationCost price (Less: accumulated

impairment)Net valueInvestment in affiliates

Cost price (Less: accumulated impairment

Cost price (Less: accumulated impairment provisions)

Other long-term investments:

Current Investments:Lower of cost and net sale value

of total investmentsLower of cost and net sale value of total investments

Marketable investments

Lower of cost and net sale value of either investment

Lower of cost and net sale value of either investment

Other current investments

Income Recognition:Upon approval of profit by the general meeting of shareholders of the investee company (up to the approval date of financial statements)

Consolidation Investment in subsidiaries subjectto consolidation

Upon approval of profit by the general meeting of shareholders of the investee company (up to the date of approval of financial statements)

Equity methodInvestment in affiliates

Upon approval of profit by the general meeting of shareholders of the investee company (up to the date of approval of balance sheet)

Upon approval of profit by the general meeting of shareholders of investee company (up to the date of approval of balance sheet)

Long-term and current investments


90

Further, with respect to requirements of the Executive Directive – Part (B) of Clause (78) of Iranian Budget Act 2011, Bank Mellat revaluated the land and building sites of all of its owned properties and recorded amounting IRR 13,100 billion out of such reassessment. 4-3-3. With respect to the Enactment of 1077th Meeting of Money & Credit Council, held on February 17 th, 2007, the depreciation of fixed assets, will be calculated based on the rates and methods as per the Depreciations Table, subject of Article (151) of Direct Tax Act, since 2006.

Depreciation of the Bank’s buildings revaluated on March20th, 2005 is calculated at the rate of 3.5% using declining method ever since as per Note (10) of the Depreciations Directive, subject of Article (151) of Direct Tax Act.

4-3-4. Depreciation of fixed assets of the subsidiaries is calculated according to Article (151) of Direct Tax Act and at the rates and methods as follows:

4-4. Good will of the business units of the BankIn execution of provisions of Article (62) of Third Development Plan, the good will of the Bank’s business units in 2004 have been recorded in the books on the basis of revaluated prices. Moreover, as in accordance with the resolution of 1077th Meeting of the Money & Credit Council, Bank’s assets are depreciated based on the depreciation tables, subject of

Depreciation method Depreciation rateAssetDeclining 7% Building & InstallationsDeclining25% Vehicles

Direct10 yearsComputer Systems SoftwareDirect3 yearsComputer Hardware (P.C)Direct 5 YearsATMDirect 5 YearsPOSDirect 10 YearsFurnitureDirect 6 YearsSorterDirect 3 Years Telecommunication EquipmentDirect 4 YearsModule

Depreciation method Depreciation rateAssetdeclining7, 8, 10, 12 percent Buildingdeclining10, 12, 15 percentInstallations

Straight Line 10 & 15 YearsInstallationsdeclining10, 12, 15, 25, 30 & 35 percentMachinery

direct 4, 8, 10 & 15 YearsMachinerydeclining20, 25, 30 & 35 percentVehicles

direct 3, 5, 10 YearsFurniture & Fixturesdeclining10, 15 & 25 percent Tools

Straight Line 1, 4, 8, 10 & 20 Years Toolsdirect3 & 4 YearsSoftware (Intangible Asset)

91

Recognition MethodType of Income Based on duration and balance of principal

loan and minimum expected profitProfit of granted loans

Based on duration and amounts of outstand-ing installments and due delay rateDelay penalties of repayment of loans installments

Pro rata durationCommission of issued guaranteesAt the time of rendering servicesCommission of other banking services

5 YearsATM

Article (151) of Direct Tax Act; therefore, no depreciation is calculated since beginning of the 1385( 2006/07).

4-5. Consolidated Good willAccounting for consolidation of the acquired business units is carried out based of purchase method. Surplus amount of cost price of acquired investment in subsidiaries subject to con-solidation, and affiliates subject to equity method concerning the group’s share out of net fair value of recognizable assets and liabilities thereof at the time of acquiring is recognized as good will and is depreciated during 20 years through direct line. The good will resulted from acquiring affiliated companies is reflected in the consolidated balance sheet as a part of book value of the long-term investment in the affiliated companies.

4-6. Bank’s Income RecognitionWith respect to the directive No, 772/MB, dated July18th, 2005, issued by the Central Bank’s Department of Baking Studies & Regulations and on the strength of enactment of the meet-ing No, 1044, dated July16 th, 2005 of the Money and Credit Council, the Bank’s incomes have been calculated on accrual basis and have been reflected in the financial statements.

Accordingly, the recognition method of the Bank’s incomes are as detailed below:

4-7. Basis for Determining Depositors’ Profit Share from joint incomeBy virtue of the Usury-Free Banking Act, ratified on 30 August,1983, and its executive direc-tives and with respect to the directive No. 1799/MB, dated January 08th, 2004 issue by the Central Bank of I.R. of Iran, the profit derived from granting loans, investment in stocks and participation bonds that are recognized according to the prevailing accounting convention, is considered as joint income and the depositors’ share will be determined in proportion to their net resources invested in the mentioned loans.

4-8. Foreign Currency Translation4-8-1. Domestic AccountsMonetary FC items with official rate are translated on the balance sheet date and non-monetary items which have been recorded at the historical cost price and in terms of reg-istered FC are translated at the prevailing rate of the creation date on the transaction date. The balance of overdue and doubtful loans is converted at the date of balance sheet at the transactional rate and an equivalent reserve for the same amount are lodged as difference of the FC translation for the overdue loans.


92

The differences due to settlement with translation of FC Items are recognized as income and/or expense in the occurrence period. The difference of translation of FC assets and liabilities of branches abroad is reported in the comprehensive profit and loss statement.

4-8-2. Foreign branches and subsidiariesAccording to the CBI notification all monetary and non-monetary items (except for share-holders equity) of the foreign branches and subsidiaries are converted at the official rate on the date of balance sheet and shareholders’ equity are converted at market rate (trans-actional) on the date of creation (historical rates). Profit and loss items in accordance with the CBI notification are converted during the period at the official rate (transactional). The differences due to conversion of financial statements of the mentioned units are reflected under the entry of shareholders’ equity.

4-9 Loans Classification Bank’s loans are classified based on the Directive of classification of credit institutes, ap-proved by Money and Credit Council, subject of Circular No. 2823/MB, dated February 24th, 2007, served by Banking Studies and Regulations Department of the CBI, with respect to the factors of payment delay, customer’s financial status and conditions of customer’s activity field.1.Current (Max. 2 months passed the maturity date)2.Overdue (between 2 to 6 months passed the maturity date)3.Non-performing (between 6 to 18 months passed the maturity date)4.Doubtful (over 18 months passed the maturity date)

4-10. Doubtful Loans ProvisionsAccording to the Directive, approved in the meetings set out in Clause (4-10) of Money and Credit Council, doubtful loans provisions are calculated and reflected in the accounts as detailed below:4-10-1. General provisions since beginning of 1385 (March21th, 2006), is calculated equal to 1.5% (it used to be 2% until 20 March 2006) of the total balance of loans, except for the loan for which specific provisions has been considered. 4-10-2. specific provisions concerning the balance of non-current classes and after deduction of collaterals according to the directive is calculated as detailed below:

provisionsClassification 10%Overdue loans (up to 2 months)20%Defaulted loans (up to 6 months)50 %Doubtful loans, with respect to customer’s solvency (up to 18 months)

100 %loans with overdue of principal and interest for 5 years or longer

4-10-3. By virtue of Circular No. 21270/91, dated April 19th, 2012, issued by the Central Bank, for the loans for which more than five years has elapsed from the maturity date of principal and interest, the total outstanding loan, without deducting the collaterals, has been considered as the basis for specific provisions.

93

4-11. Severance provisionsSeverance provisions is reflected in the accounts based on the one last month fixed salary and continuous allowances is calculated and registered for each year of service of the staff.

4-12. Staff Leave repurchase provisions Concerning the accumulated leave of staff for previous years and current year, the required provision based on up to 9 days of salary and allowances per year has been calculated and reflected in the account.

4-13. Severance liabilitiesCurrent value of Severance liabilities in relation to previous annual services of the staff (in-cluding employed, retired and pensioners subject to retirement scheme) are calculated on the basis of actuary’s assumptions and reflected in the accounts.

4-14. Dues from the GovernmentMandatory loans, which have been granted based on the guarantee of State Management and Planning and Deputy of Strategic Supervision of the President, are classified as dues from the government under the following conditions:A.Overdue loans because of the loan-taker’s failure for repayment, inadequacy of the relevant collaterals, or failure of the Bank’s measures in debt collection.B.Overdue loans, related to execution of plans of acquisition of capital assets.C.Loans granted to Ministries and Government agencies.D.All the called debts and liabilities for the period when the bank was state-owned, are related to pre-privatization era.

5. CashCash is comprised of following items:

5-1- The cash in the branches and funds in transit are sufficiently insured against robbery and accidents. The IRR 2,745 million discrepancy faced when comparing the result of counting the cash held by treasury with that registered on the ledgers at the end of the year is related to the systematic error of registrations in the latter.

Cash Cash in transit / IRRCash in transit / FC FC notes & coins

Million Rials9,844,501

18,79623,587

15,392,79825,279,682

Group Bank


17,52933,593

12,573,02722,056,529


18,79623,587

9,570,84818,790,194


17,52933,593

7,868,00615,666,708

March 20th

2016March 20th

2015March 20th

2016March 20th

2015


94

6- Dues from the Central BanksDues from the Central Banks are as follows:

6-1

6-2

March 20th, 2015March 20th, 2016Million RialsMillion Rials

273,8411,558,709Current account at the CBI94,423,328110,953,718Legal deposit at the CBI

185,709236,618Legal deposit at units abroad254,797214,280Current account at the Local Central Banks (foreign

Branches)454,2192,575,759Sight FC Deposit at the CBI

2,2050Prepayment to purchase FC from the CBI887,7031,107,505Dues from the CBI for public deposits

2,537,1072,537,107CBI’s liability due to withdrawal from the accounts29,480,46141,821,457Dues from the CBI for SHAPARAK transactions29,006,64639,540,684Dues from the CBI for FC obligations

05Party to the Central Bank’s notice(2,205)(0)Less: Prepayment to purchase FC from the CBI

157,503,810200,545,841Total

6-1-As per resolution No. 47698T/M/90-34030, dated January 5th, 2012, approved by 5-Member FC Issues regulating Committee, the Central Bank withdrew net sum of IRR 2,537 billion as the FC rate difference from Bank Mellat’s account, which has been re-corded in the books in the Central Bank’s account. The Bank is following up to collect the said amount.

6-2- Pursuant to the Circular No. 60/1015, dated December7th, 2013 issued by the CBI concerning Bank Mellat’s FC obligations in consideration of L/Cs and drafts in FC, sum of IRR 32,690 billion(USD 1,081 million)was reflected in the account of dues from the Central Bank and sum of IRR 14,347 billion was reflected in the account of the liabilities to the said Bank (under title of loans received out of FC reserve account (Explanatory Note 18), con-sequently, sum of IRR 12,791 billion was reflected in the account of the result of local FC transactions in consideration of difference of reference and transactional FC rate. Also IRR 5,552 billion profit has been recognized for this year as mentioned in explanatory note 43.

6-3. The legal reserve deposited at the Central Bank has been calculated toward execution of Clause (3), Article (14) of Monetary and Banking Law, and based on the rates designated by the Money and Credit Council, and has been approved by the Central Bank; details of the legal reserve are as follows:

Bank

95

7-1- Call FC deposits are held with the local and foreign banks, which are used in the local and foreign banking operation. The unreconciled figures of the account statements are related to FC deposits at Local banks which are mainly due to failure in finalizing the relevant vouchers by the branches due to lack of supply of FC by the Central Bank.7-2- increasing short-term deposits with banks and investment certificates of deposit at other banks is related to the banks’ assets and absorbing clients’ deposits in financial year ending March20th 2016.

7- Dues from Banks & Credit Institutions The amounts reflected in the above-said entry are constituted of the following items:

Million RialsRate (%) Million RialsRate (%)

16,656,67213.518,901,68812Sight deposits5,321,026103,572,60710Non-interest-bearing saving deposits and

free trade zones70,046,59913.553,106,53112Short-term & 1-year deposits13,352,84313.515,408,775122 to 5-year long-term deposits

943,17913.51,035,13912 Guarantee and housing-purchasedeposits

4,633,39913.52,398,58812 Advances due to L/Cs94,423,328110,953,718Total

March 20th, 2016 March20th, 2015

March 20th

2015March 20th

2016March 20th

2015March 20th

2016Million RialsMillion RialsMillion RialsMillion Rials

366,810283,361366,810283,361Current account with banks (after clearing)152,496153,443152,496153,443Sight deposits in local banks

2,390,1975,981,9862,390,1975, 981,986Due profit for time deposits with banks44,872,92527,799,36343,717,21826,314,793Call F/C deposits with the local banks 7-118,765,21386,852,45819,356,11187,716,476Call F/C deposits with the foreign banks 7-1 2,135,1912,251,2432,135,1922,251,242Time F/C deposits with the foreign banks 7-1

95,176211,68095,175211,680Time F/C deposits with the foreign branches 200,000200,000200,000200,000Non-interest bearing deposit

2,182,40764,406,0002,182,40764,406,337 Short term deposits with banks 7-24,541,06110,268,7774,541,06110,268,777Investment CDs with other banks 7-2

16,793,00018,500,00016,793,00018,500,000Overnight interbank loans 7-312,409,265892,86212,409,265892,862Checks under collection

104,903,742217,801,509104,338,933217,180,957Total

Group Bank


96

7-3- the sum of IRR13,000 billion of above-mentioned amount is related to bank Sepah and bank Keshavarzi for purchasing wheat, which due to failure of CBI in repayment, the same amount has been received from Central Bank (note18 of financial statements amount of IRR 12,800 billion). A profit of 25% is being paid to Central Bank In this regard. Furthermore, with respect to payable funds, 25% profit is being calculated and transferred to the relevant ac-count.

8- Dues from the GovernmentDues from the Government are as follows:

BalanceBalanceInterestPrincipalMillionMillionMillionMillion

39,639,58151,753,20441,682,18610,071,018Dues from Government in H/O 8-1995,4161,075,280150,351924,929 Dues from Government in FC for ABC

Bank of Bahrain30,403,19143,677,18631,360,22012,316,967 Dues from Government at Branches

&Treasury Division71,038,18896,505,66973,192,75723,312,913Total

Less:

(17,015,123)(28,007,522)(28,007,522)(0)Following years profit of rider loans, pledged by the Government

54,023,06468,498,14745,185,23523,312,913Balance after deducting following years profit

(810,346)(1,027,472)(677,779)(349,694)General provisions of doubtful loans53,212,71867,470,67544,507,45622,963,219Total

March 20th, 2016

Bank

March 20th, 2015

97

8-1- Sum of IRR 51,753 billion of dues from the Government in the H/O is as follows:

8-2- Turnover of Receivable Account from the Government

BalanceBalanceInterestPrincipal Million

Rials Million

Rials Million

Rials Million

Rials70,806000Ahvaz Sugar Lump & Sugar Treatment

26,570,83038,755,25838,755,2580Outstanding profit of withholding loans

2,926,9282,926,9282,926,9280Deficit of operation tax provisions obligated by government (2006-2008)

7037030703Flood and earthquake victims share of Bank Saderat

5959059 Loans to the married 1988 - share ofBank Saderat

8,9468,94608,946 Earthquake striking north and northwestof Iran - share of Bank Saderat

8028020802 Relief to flood and earthquake victimsBank Melli

128,000128,0000128,000Salary to prisoners of war for their cap-tivity period

9,932,5079,932,50709,932,507 Liability of Privatization ORG.

39,639,58151,753,20441,682,18610,071,018Total

March 20th, 2015

BankMarch 20th, 2016

2009 2010 2011 2012 2013 2014 2015

16,289,51614,738,33734,039,10628,739,12634,532,07141,029,44454,023,063

91,882,45123,052,01915,243,39728,729,04214,648,34434,354,91639,385,077

93,433,6293,751,251

20,543,37722,936,097

8,150,97021,361,29624,909,993

14,738,33734,039,10628,739,12634,532,07141,029,44454,023,06368,498,146

Million Rials Million Rials Million Rials Million Rials

YearOpeningBalance

DebitTurnover

Credit Turnover

ClosingBalance


98

8-3- According to the Resolution No. 45251/150061, dated September21th, 2011, approved by the Council of Ministers, in consideration of assignment of shares for IRR 5,292 billion, title of shares of some companies for IRR 4,331 billion were transferred.

8-4- According to Resolution No. 48485T/262656, dated March 18, 2013, approved by the Council of Ministers, concerning the government’s liability to the banks, upon calculating the government’s previous amounts and assignments via shares, the government’s properties and assets and those of the public companies, at the discretion of the Minister of Economic Affairs and Finance, have to be settled applying the method and pricing procedures approved by the assignment Board, toward execution of clause (24-3) and Part (C) of the Clause (24-3-4) of the Iranian Budget Law for the Year 2012. Despite conclusion of collective contract No. 90/2/11422 with the Privatization Org. concerning transfer of titles of the shares of some companies, the provisions of the said contract has not been executed. Therefore, out of IRR 12,139 billion of the bank’s receivables due from the Government, shares for IRR 2,756 billion has been transferred and IRR 9,383 billion out of assign-ment of the shares of the preceding years has not been settled and the relevant proprietary rights have not been allocated to the bank in this respect; therefore, the receivables relevant profit, up to the settlement date, are reflected in this entry.

8-5- According to the Resolution No. 48485T/262656, dated March18th, 2013, approved by the Council of Ministers, out of sum of IRR 9,808 billion, sum of IRR 530 billion shares has been trans-ferred and sum of IRR 9,279 billion of assignable shares of public companies has been allocated to the Bank through Privatization Org., but proprietary rights have not been allocated to the bank in this respect; therefore, the relevant receivables and profit are reflected under this entry until total settlement.

8-6- Interest of dues from the Government has been calculated and reflected in the accounts ac-cording to the rate of transactional contracts, notified by the Central Bank of I.R. of Iran. Further the delay penalty concerning such receivable from the government has been calculated and recorded in the accounts. The aforementioned interest in this way will be less for the amount of IRR 3,555 billion.

99

9. Loans and advances to public SectorThe balance of Loans and advances to public Sector (totally belonging to the Bank) is as follows:

Total Granted Loans & Receivables

Rider Granted fasilities to Public Sector

Granted Loans & Receivables from

Public SectorTitleMarch 20th

2015March 20th

2016March 20th

2015March 20th

2016March 20th

2015March 20th

2016

2,789,4802,491,6181,151,961992,3461,637,5191,499,272Local currency loans (net)

144,635,473161,790,342--144,635,473144,635,473Foreign currency loans (net)

49,07541,534--49,07541,534Receivable for due to L/C paid in Rials

74,255,10985,157,248--74,255,10949,075Redeemed bonds

69,81769,817--69,81717,752,965Receivable delay payment charges

905,8891,300,271--905,8891,300,271Receivable profit

249249--249249Other

Less:

(164)(164)(0)(0)(164)(0)translation Difference of NPLs

(4,792,256)(4,028,013)(0)(0)(4,792,256)(4,028,013)Provisions for doubtful loans

217,912,671264,506,2131,151,961992,346216,760,710263,513,867Total

9-1- Sum of IRR 161,790 (EUR 4,783) millions of loans granted in FC to National Iranian Oil Company and National Iranian Refinery And Distribution Company out of energy fund is overdue.The said loans have been extended after a three-year period according to the Agreement dated March17th, 2014 with the said company, and for the purpose of collecting interest of the said loans and participating bonds reflected in the financial statements, sum of EUR 50 million is being collected on a quarterly basis (Sum of EUR 650 million has been collected up to now), and with regard to the said agreement, no reserve for the dedicated doubtful ac-counts has been considered in the account. Also, Sum of IRR 44,137 (EUR 1,172) billions of the total loans granted to the National Iranian Refinery And Distribution Company has become overdue. With respect to received collateral and the above agreement, no specific provisions for doubtful loans has been considered in the accounts. Furthermore, the sum of EUR 600 million of the mentioned loans is related to the Setareh Khalij Fars Company of which the National Iranian Refinery And Distribution Company has not accepted repay-ment. Moreover, according to clause “N” of note 2 of the 2016 budget law, subsidiaries of the Ministry of Petroleum will receive a two-year moratorium for repayment of the principal and interest of the granted loans.


100

10. Loans and advances to other parties

Group Bank

Installment sale Reward contract Hire purchaseForwardProfit sharingEquity participationInterest-freeDebtors for paid L/CsDebtors for paid guaranteesDebtors due to FC L/CsGranted FC loans FactoringLoans granted to foreign branches Rent-to-own loansRedeemed participation bondsPersia International Bank

Total

56,869,32320,258,595

1,976,898335,938

27,122,155235,234,961

30,962,5112,773,2293,739,731

10,700,007121,172,847

3,459,512166,601

111,200,6022,840,0001,834,557

630,647,469

65,890,91211,608,5572,021,659

544,42334,328,147

294,262,15136,822,103

4,672,5811,695,4035,852,831

187,820,57312,159,962

143,516129,345,212

4,250,0381,857,182

793,275,249

62,547,24420,258,595

2,353,153335,938

29,406,926243,972,877

30,962,5112,773,2293,739,731

10,700,007121,172,847

3,468,370166,601

111,200,6022,840,000

0

645,898,632811,469,128

72,369,68511,608,5572,262,025

544,42339,267,748

302,654,47036,822,103

4,672,5811,695,403

5,8521,861187,820,573

12,159,962143,516

129,345,2124,250,038

0

March 20th 2015

Million Rials

March 20th 2016

Million Rials

March 20th

2015 Million Rials

March 20th 2016

Million Rials

Loans and advances to other entities of the bankLoans and advances to subsidiariesLoans and advances to the Persia International Bank Total

Group

645,898,632(17,085,720)

1,834,557630,647,469

March 20th, 2015

811,469,128(20,051,059)

1,857,182793,275,249

March 20th, 2016

10-1. Loans and advances to subsidiaries are as follows:

10-1-1- Loans granted to other entities includes IRR 60,933 billion of loans to banks’ staff, in the form of reward contract for IRR 12,519 billion, installment sale for IRR 31,285 billion and interest-free loan for IRR 17,128 billion.

101

10-2. Loans and advances to other related parties except for subsidiaries are as follows:

Res

erve

of

Rec

eiva

bles

Net

Tr

ansl

atio

n D

iffer

ence

Net

Pr

ofit &

C

omm

issi

onB

alan

ce

Mill

ion

Ria

ls M

illio

n R

ials

Mill

ion

Ria

ls M

illio

n R

ials

Mill

ion

Ria

ls56

,869

,323

65,8

90,9

12(0

)(6

,431

,515

)(2

6,62

2,89

3)98

,945

,319

Inst

allm

ent s

ale

20,2

58,5

9511

,608

,557

(0)

(629

,030

)(5

,024

,686

)17

,262

,273

Rew

ard

cont

ract

1,97

6,89

82,

021,

659

(0)

(274

,642

)(8

12,1

45)

3,10

8,44

6H

ire p

urch

ase

335,

938

544,

423

(0)

(1,1

05,0

35)

(0)

1,64

9,45

7Fo

rwar

d

27,1

22,1

5534

,328

,147

(0)

(2,8

15,0

93)

(0)

37,1

43,2

40P

rofit

sha

ring

235,

234,

961

294,

262,

151

(0)

(13,

869,

808)

(0)

308,

131,

959

Equ

ity p

artic

ipat

ion

30,9

62,5

1136

,822

,103

(0)

(1,6

93,6

88)

(75)

38,5

15,8

66In

tere

st-fr

ee

2,77

3,22

94,

672,

581

(0)

(2,9

86,4

93)

(0)

7,65

9,07

3D

ebto

rs d

ue to

pai

d ou

t L/C

s

3,73

9,73

11,

695,

403

(0)

(3,7

25,8

53)

(103

,073

)5,

524,

328

Deb

tors

due

to p

aid

out g

uara

ntee

s

10,7

00,0

075,

852,

831

(0)

(19,

121,

903)

(0)

24,9

74,7

34D

ebto

rs d

ue to

FC

L/C

s

121,

172,

847

187,

820,

573

(16,

543,

810)

(5,1

44,8

70)

(1,7

83,8

26)

211,

293,

080

Gra

nted

loan

s in

FC

3,45

9,51

212

,159

,962

(0)

(217

,772

)(1

,415

,836

)13

,793

,570

Fact

orin

g

166,

601

143,

516

(0)

(962

)(0

)14

4,47

8Lo

ans

gran

ted

to b

ranc

hes

abro

ad

111,

200,

602

129,

345,

212

(0)

(2,4

31,0

54)

(27,

550,

289)

159,

326,

555

Ren

t-to-

own

cont

ract

2,84

0,00

04,

250,

038

(0)

(73,

371)

(0)

4,32

3,40

9R

edee

med

bon

ds

628,

812,

912

791,

418,

069

(16,

543,

810)

(60,

521,

088)

(63,

312,

822)

931,

795,

787

Tota

l

Mar

ch 2

0th, 2

015

Mar

ch 2

0th, 2

016

Ban

k


102

10-2-1. Classification of granted loans, according to directive approved by the Mon-ey and Credit Council, is as follows:

Total Doubtful account ArrearPassed due

dateCurrent

Million Rials Million Rials Million Rials Million Rials Million Rials

98,945,3199,272,138641,5271,279,76187,751,893Installment sale

17,262,2731,108,089128,55266,49215,959,140Reward contract

3,108,44672,66021,4719,1213,005,193Hire purchase

1,649,4571,255,40482394,043Forward

37,143,2403,867,799266,432126,96132,882,048Capital bailment

308,131,95923,260,5421,925,658925,963282,019,797Civil participation

38,515,8661,086,727432,42982,48936,914,220Interest-free

7,659,0736,827,83700831,237Debtors due to paid out L/Cs

5,524,3285,524,328000 Debtors due to paid outguarantees

24,974,73424,974,734000Debtors due to FC L/Cs

211,293,08029,556,596320,52978,719181,337,236 Granted FC loans

13,793,570044,6967,87313,741,001Factoring -IRR

144,478080,358064,120 Loans granted to branchesabroad

159,326,555904,2613,421,3383,836,079151,164,877Rent-to-own

4,323,4090004,323,409Redeemed participation bonds

931,795,787107,711,1167,282,9996,413,459810,388,213Total

(16,543,810)(16,230,871)(312,939)(0)(0)Less: Difference of FCconversion in arrears

915,251,97791,480,2456,970,0606,413,459810,388,213 Total

Less:

(63,312,822)(63,312,822)Following years profit &

(11,206,038)(11,206,038) General provisions of doubtfulloans

(49,315,050)(48,110,386)(877,711)(326,952)(0) Specific provition of doubtfulloans

791,418,06943,369,8596,092,3496,086,507735,869,353Total

March 20th, 2016Bank

103

10-2-1-1- Loans in FC are as follows:1- Sum of IRR 113,284 billion, equal to USD 3,746 million of loans to Petro Sina Aria Co. Oil Industry Eng. Co. sum of USD 3,157 million and Petro Paidar Co. sum of USD 343 million out of National development Fund resources for the development of South Pars Installments. According to the agency contracts between the Bank and National Development Fund it is agreed that totally sum of USD 8,940 million be granted to above said companies in which sum of USD 5 million to be paid to the Petro Sina Aria Co. Oil Industry Eng.until August 22 2016. Also sum of USD 2 million to be paid to Petro Paidar Company until November 23 2016, finally sum of USD 1,940 million pay to Setareh Khalij Fars Oil Co. until July 6th, 2017.

2- The loans for sum of IRR 23,172 billion (equal to EUR 683 million) out of the OSF, also sum of IRR 4,722 billion ( equal to EUR 140 million) of loans granted out of the OSF have not yet been set off (note 18). On the whole, the above said loans have received morato-rium as per applicant’s request and with respect to CBI’s delegation of power to the Bank’s credit authorities for settlement.

3- Furthermore, the granted FC loans include sum of 40,265 billion in consideration of interest and delay penalty received concerning granted FC loans to the public and non-public companies.

10-3- According to the requirements set out in the provisions of Articles (28) and (29) of Budget Laws for the years 2011 and 2012 and also the Bank’s Credit Policies, sum of IRR 82,600 billion of receivables was depreciated and classified as current loans. and accord-ing to the Bank’s policy, the relevant doubtful provisions are calculated with regard to the new classification and they are recognized as the earning due from the said process. It is evident that failure in compliance with the conditions of the contract, depreciation of the said loans will return to the initial receivables class and the required reserves are considered in the accounts and the recognition of earning is ceased.

10-4- About 42% total securities provided in return for the private loans is made up of checks and promissory notes.

10-5- Out of IRR 5,775 billion of loans granted to Tehran Municipality and sum of EUR 184 million (principal and liability) are for the L/Cs related to Wagon making and Tehran Subway Companies, which are past due and in arrears; nevertheless, according to the Letter of Under-standing, dated April 10th, 2012 it was decided that they may be sett off against density duty of construction of the Bank’s buildings. Additionally, sum of IRR 3,042 billion was received in consideration of L/Cs of Wagon Making Co. and recorded in the entry of advance.

10-6- The entry of loans granted and dues from others (explanatory note 10 of financial statements) including IRR 16,000 billion civil participation working capital granted to the Social Security Investment Company in the current year, the initial agreement in order to in-crease the level of mutual cooperation by concentrating resources of the Ministry Of Health And Medical Education, and subsidiaries in order to develop a suitable platform and making loans to the said Ministry. Principal and interest Settlement is not realized on the maturity


104

(March20th, 2016); however, it has been extended by payment of the interest. Meanwhile, the collateral of the mentioned loan is Bank Mellat shares, held by the Social Security Organiza-tion and Saba Taamin Investment Company.

10-7. Loans granted to the Group Member Companies

10-7-2- Out of IRR 6,582 billion of installment sales, sum of IRR 6,537 billion is related to grant-ing loans to construction companies of Bank Mellat and Peiriz Bonyan Marsus Co. to purchase Autobank, Elahieh, Bagh-e-Jamshidieh, Shahab and Latman-e- Kan Bank properties.

Bank

Installment Sale Hire purchaseReward FactoringEquity partnershipTotal

Balance

Million Rials6,582,052297,561

5,014,8240

8,520,120

20,414,557

March 20th, 2016 March 20th,2015

Following Year Profit

Million Rials(4,617)(53,535)

(0)

(0)

(58,151)

NPLs

Million Rials(98,662)(3,660)(75,222)

(0)(127,802)

(305,346)

Net


4,939,6010

8,392,318

20,051,059

Net


2,284,7708,858

8,737,916

17,085,720

10-7-1. According to the directive approved by the Money & Credit Council, the above loans are classified as below:

Total Doubtful Defaulted Overdue Current Million Rials

Million Rials

Million Rials

Million Rials

Million Rials

6,582,0520006,582,052 Installment Sale297,561000297,561Hire purchase

5,014,8240005,014,824Reward 8,520,1200008,520,120Equity partnership

20,414,55700020,414,557Total

Less:

(58,151)0(58,151)Following years’ profit

(305,346)0(305,346) General provisions of doubtfulloans

(0)00(0) Specific provisions of doubtfulloans

20,051,05943,369,8596,092,349020,051,059Total

March 20th, 2016Bank

105

Debtors due to FC L/Cs & time draftsLess:General provisions for doubtful loansTotal

BankMarch 20th

2015Million Rials24,194,666

(329,851)23,864,815

March 20th


(232,856)15,290,903

Group

Group

Bank

Participation bonds

Participation bonds – private sector

Participating bonds – public sector

Total

March 20th

2015Million Rials

1,448,752

0

7,725,282

9,174,034

March 20th

2015Million Rials

2,382,035

0

4,523,107

6,905,142

March 20th

2016Million Rials

1,501,891

1,644,164

8,061,159

11,207,214

March 20th

2016Million Rials

2,448,678

1,644,164

5,537,576

9,630,418

Investments & Participations

Total

BankMarch 20th


37,662,540

March 20th


24,859,670

March 20th


45,959,341

March 20th 2016


25,383,779

11. Dues for L/Cs & time draftsBalance of dues for L/Cs (totally owned by the Bank) is as follows:

12. Participation Bonds & the likeThe above entry includes balance of participation bonds and securities as follows:

13. Investments & PartnershipsThe above entry includes balance of participation bonds and securities as follows:

11-1. Out of sum of IRR15, 524 billion Dues for L/Cs & time drafts (Note 26 of Financial State-ment) are related to foreign banks’ overdue finance credit lines and as it was not possible to settle the obligations with respect to the sanctions and lack of payment channel via foreign correspondents and also clarification of FC dues subject of circular 60/1015 of central bank; after special FC auditory and FC allocation from Central Bank, settlement of the obligations is not feasible. Further, some amounts have been received in this regard as detailed in Note (23).


106

13-1. Investments & Partnerships of the Group include the following items:

13-1-1. Investment of the group in the shares of listed companies is mainly related to invest-ment of the Mellat Financial Group in the listed companies. The said investment is mainly to the following companies:

Liquid investments:Shares of listed companiesTotalInvestment in the other companies:AffiliatesCompanies abroadOther Local companiesInvestment in propertiesInvestment Deposits at BanksTotal Total investment in securities

Note March 20th

2015Million Rials

10,590,43810,590,438

3,486,7695,754,2474,020,5033,847,4819,963,10227,072,10237,662,540

March 20th

2016Million Rials

10,086,09110,086,091

3,368,2015,754,24710,525,3373,742,52212,482,94335,873,25045,959,341

13-1-1

13-1-2

Bandar Abbas Oil RefineryIsfahan Oil RefineryMobile Communication Co.Pardis Petrochemical Co.Bank Saderat IranNational Iranian Cupper Industries Co.Jam Petrochemical Co.Iran Telecommunication Co.OtherTotal

NO. of Shares

NO. of Shares Cost Price Cost Price

March 20th,2016 March 20th,2015


766,025,24441,442,61369,238,382

240,000,000209,337,915

21,850,431101,395,863

-

Million Rials3,688,4701,037,846

949,541677,013222,196553,086220,774338,780

2,398,38510,086,091

Million Rials3,981,4262,405,2321,566,441

649,715252,367361,416203,231294,585

Million Rials3,712,0581,076,334

947,889601,835441,710553,086370,485334,381

2,552,66010,590,438

Group

107

13-1-2. Investment in companies abroad is mainly related to Bank Mellat (parent Company) as follows:

13-1-3- Due to the insignificant difference between equity and cost price of investment in EIH Bank, disclosure of investment using equity method was disregarded.

13-2. Investments and partnerships of Bank Mellat (parent company) are as follows:

EIH BankOtherTotal

% stake Cost PriceCost Price Cost Price

March 20th

2016March 20th

2015

26.31%-

Million Rials1,059,0644,695,1835,754,247

92,031,154

-

Million Rials1,059,0644,695,1835,754,247

March 20,2016

SubsidiariesOther Companies – local Other Companies – abroadTotalLess:Impairment provisions Total

March 20th

2016March 20th

2015Million Rials

18,027,989259,288

6,582,41024,869,688

(10,017)24,859,670


259,2887,033,292

25,394,458

(10,679)25,383,779

Bank

Bank


108

13-3. Particulars of subsidiaries of the group are as follows:

Name of Company Location Group Main Ent Major ActivityA) Parent entity’s direct investmentsPersia International Bank (PIB) England 60 60 BankingMellat Bank Armenia Armenia 100 100 BankingA-1) Behsaz Partnership GroupBehsaz Mellat Partnership Iran 100 100 InvestmentAlmaseh Saz Iran 92.93 - Cutting tools productionBehsaman Mellat Iran 100 - Manpower supplyIsfahan Behris Iran 99.62 - Thread productionKerep Naz Iran 100 - TextileAirdak Iran 99 - Constructional contractBank Mellat Construction Iran 100 - Constructional servicesBank Mellat publication Iran 100 - publication servicesRahbari Behsaz Industry Iran 100 - Business servicesPeiriz Bonyan Marsous Iran 100 - Project managementJahan Behsaz Mofarah Iran 100 - Hotel managementTehran-Saveh Freeway Iran 55 - Build & Operate of the FreewayMaad Marketing & Sales Development Iran 100 - Bank’s Surplus properties management

B) Fanavaran Houshmand Behsazan Farda Group

Fanavaran Houshmand Behsazan Farda Group Iran 100 100 Software design & productionBehsazan Mellat Iran 100 - Software design & productionBehpardakht Mellat Iran 100 - Software design & productionYas Arghavani System Engineering Iran 100 - Software design & productionYas Arghavani Industrial Engineering Iran 100 - Software design & productionShaghayegh Software Engineering Iran 100 - Software design & productionSecure Infrastructure of Transactional Services Co. Iran 100 - Equipment installation C) Mellat Financial GroupMellat Financial Group Iran 100 100 InvestmentBehsaz Mellat Insurance Services Iran 100 - Insurance servicesMaa Insurances Iran 17 10 Insurance servicesTadbirgaran Behsaz Mellat Iran 100 - Eveluation of properties Tarh va Andisheh Behsaz Mellat Iran 100 - Collection debtsBehsaz Business Service Development Iran 100 - Business & partnershipMellat leasing Iran 90 - LeasingMellat Investment Bank Iran 100 - FinancingBank Mellat Brokerage Iran 100 - Share brokerage servicesMoein Investment Development Iran 100 - InvestmentMellat Exchange Iran 100 - Exchange servicesArzesh Afarin Atlas Iran 100 - Collaboration, Brokering & TradingPetro Faravaran Atlas Iran 100 - Business servicesNosaz Construction & services Iran 99 - Constructional servicesVavan Construction & Urban Development Iran 100 - Constructional servicesKavosh Research Town Iran 70 - Research services Mellat Insurance Coverage Services Iran 100 - Insurance companies’ agencyNogam Oil & Gas Co. Iran 100 - Oil & gas field activity

stake%

109

13-4. Particulars of group’s affiliates are as follows:

13-5- With regard to insignificance and lack of on-time access to the affiliate’s financial statements, dis-

closing investment using equity method has been disregarded.

Name of Company Location Group Main Ent Major Activity

Refah Chain Stores Iran 10 - Retails

Amin Investment Iran 10 - Financing

Bafgh Iron & Steel Mineral & IndustrialComplex (Plan)

Iran 40 - Minerals extraction

EIH Bank Germany 26.31 26.31 Banking

Construction Industry technology develop-ment

Iran 40 - Construction affairs

Excavating and exploration of Mineral Iran 40 - Mining operation

Saderat Fars development industry Iran 19 Mining operation

Alborz Insurance Iran 30 - Insurance services

Foulad Shargh Kaveh Iran 16 Mining operation

Asia insurance Iran 16 - Insurance services

stake%

of stake%


110

14. T

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ance

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the

finan

cial

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Sol

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the

finan

cial

year

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emen

ts &

oth

erch

ange

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ts B

alan

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n20

/03/

2016

Bal

ance

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3/20

14

Fin

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ci-

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ulat

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ion

of s

old

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Bal

ance

on

20/0

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16 B

alan

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n20

/03/

2015

Ban

k56

,711

,782

5,47

8,83

3(1

,093

,682

)(0

)(2

,207

,960

)58

,888

,973

9,54

8,02

12,

743,

135

(611

,107

)(6

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(611

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,862

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63,7

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Ban

k50

,624

,637

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6(1

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,526

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,302

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588

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,751

,687

41,9

80,7

27

111

Restated

March 20 th, 2016 March 20 th, 2015

Million Rials Million Rials

Fixed assets 51,302,566 50,624,637

Less

Net surplus of revaluation of the years 2004 - 2011 (20,069,195) (20,410,683)

Provision for depreciation of movable and immovable (9,550,879) (8,643,910)

Net fixed assets 21,682,492 21,570,044

Add

Intangible assets 6,087,169 3,346,186

Leased capital items 85,383 71,040

Above-2 year property collateral 13,445,817 2,931,171

Total 41,300,861 27,918,441

Shareholders’ equity 79,557,332 71,262,014

Less

Net surplus of revaluation of the years 2004 - 2011 (20,410,683) (20,069,195)

Retained earnings (13,944,520) (10,294,517)

Total 36,906,811 49,193,621

(%) Ratio 75.65 83.96

14-1- Ratio of net fixed assets according to the Circular No. 94/62147, dated June 01th, 2015, issued by the Central Bank has been calculated as follows:


112

14-2. Tangible Fixed Assets of the Bank are as follows:

14-3- Fixed assets as detailed in the Explanatory Note 4-3-2 have been revaluated.14-4- The Bank’s properties and the acquired properties are insured up to IRR 31,908 billion.14-5- 1,138 real estates are occupied by other entities, lay within municipal plans and have encum-bered title deeds. 147 real estate’s lack title deeds, the Bank is pursuing for receiving respective title deeds.14-6- Accumulated depreciation of scrap movable assets are written off upon disposal and/or con-veyance.

Cost Price or Revaluated Amount – Million Rials

Items Balance at

the beginningof year

Assets added during financial

year

Assets soldduring finan-

cial year

Movements &other changes

Adjustments Balance at the end of

year

Land 20,277,235 - (76,049) 123,162 477,222 20,371,570

Building 13,221,992 5,790 (54,883) 1,383,462 (3,471) 14,552,891

Computerequipment 4,920,545 - (667,612) 382,843 (2,095,552) 2,540,224

Vehicles 209,834 - (272) 29,327 (0) 238,890

Furniture 3,530,884 206,690 (246,328) 899,380 991 4,391,617

Total 42,160,490 212,480 (1,045,143) 2,818,174 (2,050,810) 42,095,191

Assets in the process ofcompletion

7,124,472 3,175,538 - (1,506,624) (458,087) 8,335,299

Orders &capital prepay-ments

507,689 19,132 - (28,140) (17,437) 481,244

Capital itemsat warehouse

831,986 842,256 (0) (1,283,410) (0) 390,832

Total 8,464,147 4,036,927 (0) (2,818,174) (475,525) 9,207,375

Grand Total 50,624,637 4,249,406 (1,045,143) (0) (2,526,334) 51,302,566

113

14-7- Assets in progress are mainly comprised of Sakhteman Asef, Salsabil Hotel of Mashhad, Golestan Pasdaran, Jeihoun Site projects, etc.

14-8- The Bank’s properties are insured according to the standing property value, and with regard to the fact that building site is not subject to insurable risk; so, the buildings and immovable properties are adequately insured.

Accumulated Depreciation – Million Rials

Balance at the beginning

of year

Depreciation of financial

year

Accumulated depreciation

of sold as-sets

Adjustments Balance at theend of year

20/3/2016 20/3/2015

20,371,570 20,277,235

4,151,072 4,151,072 (17,225) (2,388) 4,527,091 10,025,798 9,070,920

1,894,603 1,894,603 541,423 (629,840) 1,816,589 723,635 9,070,920

113,862 113,862 (267) 0 136,577 102,313 95,973

2,484,373 2,484,373 40,219 1,741 3,070,621 1,320,996 1,046,511

8,643,910 8,643,910 (599,133) (630,487) 9,550,879 32,544,312 33,516,580

8,335,299 7,124,472

481,244 507,689

390,832 831,986

9,207375 8,464,147

8,643,910 2,136,588 (599,133) (630,487) 9,550,879 41,751,687 41.980.727


114

15. Intangible Assets

Group Bank

March 20th

2016 March 20th

2015 March 20th

2016 March 20th

2015


Good will 1,318,176 1,329,479 1,205,085 1,210,213

Royalty 307,269 323,811 0 0

Computer software – Net 2,723,352 579,894 2,693,573 574,870

Constructing Computer software 2,165,230 1,559,965 2,165,230 1,559,965

Other 24,454 72,306 23,281 71,175

Total 6,538,481 3,865,455 6,087,169 3,416,223

Accumulated depreciation (983,626) (395,797) (983,626) (395,797)

Total 5,554,855 3,469,658 5,103,543 3,020,426

16. Other Assets The constituents of the above entry on the balance sheet date are as follows:

Group Bank

March 20th

2016March 20th

2015 March 20th

2016 March 20th

2015


Interim receivables – Rial 16-1 16,676,773 17,858,138 36,767,712 30,711,665

Interim receivables – FC 16-2 44,356,047 9,197,108 44,356,047 9,197,108

Interim receivables FC abroad 712,707 636,593 712,707 636,593

Accounts receivables 16-3 14,651,114 13,904,336 0 0

Group Co. 76,396,641 41,596,175 81,836,466 40,545,367

Owned collaterals 16-4 14,311,923 14,024,594 14,311,923 14,024,594

Receivable profit & commission 60,896 80,619 60,896 80,619

inventory 346,062 342,863 346,062 342,863

Ready-for-sale assets 1,685,124 1,774,692 1,374,126 1,480,894

Other 1,761,999 6,175,885 121,118 116,603

Total 94,562,644 63,994,828 98,050,591 56,590,939

Less :Doubtful loans provisions (1,216,856) (598,585) (1,216,856) (598,585)

Total 93,345,788 63,396,243 96,833,735 55,992,354

115

16-1. Interim receivables in Rials are comprised of the following items:

16-2. Out of IRR 44,356 billion of interim FC receivables, sum of IRR 42,412 billion is related to the FC bonds of South Pars Oil & Gas Co. which will be collected according to the agreement reflected in Explanatory Note (9-1). Further, sum of IRR 965 billion of the interim FC receivables is related to dues from Bank Maskan for 2 L/Cs opened by the said bank, for collection of which legal actions are in progress. Subsequently, Bank Maskan has litigated against Bank Mellat, also clarifi-cation of the situations is subject to the verdict of the court.

16-3. Accounts receivables are comprised of the following items:

16-4- Securities include IRR 6,458 billion of shares of National Iranian Copper Industries Co., sum of IRR 1,986 billion of movable properties, sum of IRR 5,667 billion of immovable properties and sum of IRR 201 billion of other possessed securities.

16-4-1- According to the Minutes of Extraordinary General Meeting held on November 30, 2014 National Iranian Copper Industries Co. have agreed with 24% increase of their capital, and the foregoing is being followed up concerning registrations of the same in the books.

16-4-2- Out of the possessed properties, 1,061 properties in provinces and 70 properties in Tehran and free zones have not yeat been handed over by the former owners.

16-4-3 ready-for-sale assets have been classified according to the Resolutions No. 3247/18, dated March 03th, 2014 and 3274/74, dated July 07th, 2014 adopted by the Board of Directors of the Bank, which were published in the widely-circulated Newspapers for several times

Group Bank March 20th

2016 March 20th

2015 March 20th

2016 March 20th

2015 Million

Rials Million

Rials Million Rials Million Rials On-account payment & receivablesfrom companies 5,181,348 752,417 5,181,348 2,302,721

Dividend receivable from othercompanies 1,124,570 6,505,391 25,426,499 21,603,438

Profit due from bonds 84,916 1,934,124 84,916 1,934,124

Other items 10,285,939 8,666,206 6,074,949 4,871,383

Total 16,676,773 17,858,138 36,767,712 30,711,665

Group

March 20th, 2016 March 20th, 2015


Trade notes receivables 9,330,556 802,654

Trade receivables 5,377,442 13,525,447

Other 0 205,722

Doubtful loans provisions (56,884) (629,488)

Total 14,651,114 13,904,336


116

17- Items in Transit

Items in transit on the balance sheet date are as follows:

March 20 2016 March 20 2015 March 20th

2016 March 20th

2015

Debtors Debtors Restated creditor Creditor


Center /IRR 470,811,848 369,702,237 Center /IRR 533,890,876 435,141,922

Center /FC

Branches /IRR

205,647,079

0

198,613,435

10,538

Center /FC

Branches /IRR

219,088,950

1

201,295,978

0

Branches / FC 18,114,904 546,137,817 Branches FC 0 546,137,817

Local receivables /IRR (17-3) 67,273,847 112,046,490 Local creditors/IRR (17-4) 18,731,500 60,672,074

Local receivables /FC 446,344 47,308 Local creditors/ FC (17-3-2) 36,155,970 25,874,836

Capital paid to forign branches FC

1,435,559 1,435,559 Capital of branchesabroad 1,759,559 1,435,559

Surplus resources 36,416,781 15,704,249 Surplusresources 36,420,644 15,704,249

Legal deposit of branches in free zones 3,087,940 1,059,621

Legal deposit of Free Zones

Branches3,115,469 1,059,621

Rial equivalent of FC transac-tions account (17-1)* 325,016,678 256,234,906 FC position

account 325,016,678 256,234,906

FC position account 132,620,119 120,867,115Rial equivalent of FC transactions account

132,620,119 120,867,115

Sight FC Deposit inforign branches

4,953,398 5,028,111 Sight deposit of H.O. 4,757,667 4,743,247

Sight FC Deposit at branches forign held with one another 13,335 338,328

Sight Deposit at branches abroad forign held with

one another another

246245

Time FC Deposit at branches forign held with one another

0 310,492 Time FC Deposit at branches fori-gn held with one

another643,560 454,743

Dues from H.O. 3,627,980 2,817,526 Time deposits of H.O. 215,522 -

Total 1,269,465,810 1,630,353,731 1,312,452,761 1,669,622,311

Items in transit 42,986,951 39,268,580 0 0

Total 1,312,452,761 1,669,622,311 1,312,452,761 1,669,622,311

117

17-1- Concerning the above note, provisions of the Letter No. 1225/BM, dated February 06th, 2002, issued by General Management of Supervision on banks and credit institions department of Bank-ing Studies & Regulations of the Central Bank, subject of the Directive of Procedure of Issuance and Registration of Accounting Documents for to FC Operations have been complied with.

17-2- Major items of IRR Center / FC Center and Local debtors and creditor, subject of the Note.

17-3 and 17-4 are mainly due to process of crediting/withdrawal to/from SHETAB, SATNA, SHAPARAK etc. clearing systems with the branches and divitions, which are settled within a few days.

17-3. Local receivables include the following items:

Note March 20th, 2016 March 20th, 2015

Million Rials Million RialsIntra-unit Accounts 17-3-1 1,599,128 1,249,914Payments to SATNA for departments 10,448,854 19,001,083Core Unit 85,600 55,000 Funds credited to Mellat current account 0 49,732,123SHAPARAK 1,148 2,874,046PAYA Drafts System 1,283 1,285SHETAB 12,252,543 0Funds withdrawn from core accounts 49,690 1,396,129Allocation of FC for LCs & DCs 17-3-2 36,146,875 25,874,836

Other items 17-3-2 6,688,725 11,862,074

Total 67,273,847 112,046,490

17-3-1. Items related to intra-unit accounts comprise the following items:


Million Rials Million RialsPayment of drafts drawn by other departments 807,957 861,648

Working capital of branches 791,172 388,266

Total 1,599,128 1,249,914

17-3-2- The entries for internal receivables in Rial and local payables in FC, are intermediary entries between the branches and international division related to the past FC obligations subject of circular No. 60/1015.


118



Sight FC deposits of the CBI 1,514,360 2,665,044

Time FC deposits of the CBI 18-1 137,268,018 123,787,862

Loans received from the CBI 12,800,000 800,000

Loans received from the NDF 18-2 4,722,340 4,282,270

Dues to the CBI 14,347,725 13,083,667

Dues to the CBI for FC rate difference (non-exempt cases) 39,337 45,271

Total 170,691,780 144,664,114

Less:

Dues from the CBI for managed float rate difference (460,341) (310,859)

Total 170,231,439 144,353,255



Intra-unit accounts 7,738,749 386,129

Shetab 0 22,034,356

Clearing house 436,586 11,730,848

Funds credited to JAMM account 2,650,505 0

Subsidy of SME’s 91 295

Shaparak 0 0

Funds deposits out of core accounts 70,276 444,964

Other items 7,835,294 26,075,482

Total 18,731,500 60,672,074

17-4. Internal payables comprise the following items:

18. Dues to the CBI Bank

119

Group Bank

March 20th 2016

March 20th

2015 March 20th

2016 March 20th

2015


Interest-free current Vostro account de-posit (after clearing)

92,492 82,806 92,492 82,806

Interest-free current account deposit ofnon-bank credit institutes

685,227 985,383 685,227 985,383

Sight FC deposit of Iranian banks 6,756,913 9,249,912 6,756,913 9,249,912

Sight FC deposit of foreign banks 844,163 23,677 2,328,733 2,112,668

Time FC deposit of Iranian banks 9,213,793 9,896,358 9,213,793 9,896,358

Time FC deposit of foreign banks 4,235,588 3,737,668 4,235,588 3,737,668

Loans received by subsidiary companies from other banks

2,736,109 2,544,985 0 0

Deposits of other banks 57,365,267 28,781,499 57,365,267 28,781,499

Total 81,929,551 55,302,289 80,678,012 54,846,294

19. Dues to Banks and Credit Institutions

18-1- It is related to extension of FC deposits with the central bank which is conducted via SWIFT up to the end of the year and due to the liquidity problem in FC segment, sum of IRR 10,226 billion as the profit of the central bank’s FC deposit with Bank Mellat has not been remitted to the account of central bank.

18-2- The entry of liability to the Central Bank includes loans received out of the NDF which were granted to the private sector in the preceding years. The profit share of the NDF out of these kind of loans, regardless of the maturity, will be credited to the Central Bank’s account at the rate of 40% interest and delay penalty after collecting the installments. Meanwhile, as the amount of EUR 27.8 million of the matured principal in-stallments have been extended, it has not yet been remitted to Central Bank’s account.


120

20-1- Different bank checks sold include local intra-city issuing branch, bank checks issued by other branches and inter-bank checks issued by other banks, which have been issued at the request of the customers and are settled within 72 hours.

20-2- the balance of this entry is related to the FC drafts of customers.

20. Sight Deposits

Sight deposits on the balance sheet date are as follows:

Group Bank

March 20th 2016

March 20th

2015 March 20th

2016 March 20th

2015


Current interest-free deposits- IRR 127,006,168 135,845,307 127,136,981 135,774,268

Current interest-free deposits- FC 42,549,382 15,959,192 42,562,315 15,976,803

Different bank checks 12,410,021 15,462,786 12,410,021 15,462,786

Equity participation joint-account 5,784,177 2,991,795 5,784,177 2,991,795

Interim payables – IRR 8,655,690 4,925,408 10,570,772 6,150,540

Interim payables – FC 57,295,049 26,973,722 57,295,049 26,973,722

Payable profit & commission 46,868 44,504 46,868 44,504

Other items 1,531,152 1,766,747 1,531,152 1,766,747

Total 255,278,507 203,969,461 257,337,335 205,141,164

21. Savings Deposits & the like

The above entry on the balance sheet date includes:

Group Bank

March 20th

2016 March 20th

2015 March 20th

2016 March 20th

2015


Interest-free savings deposit / IRR 57,920,064 50,025,701 57,920,851 50,025,769

Interest-free savings deposit / FC 5,371,271 6,384,369 5,371,271 6,384,369

Customers saving 445,876 421,698 445,876 421,698

Total 63,737,211 56,831,768 63,737,998 56,831,835

121

22. Time Investment DepositsInvestment deposits are comprised of the following items:


2016 March 20th

2015 March 20th

2016 March 20th

2015Million Rials Million Rials Million Rials Million Rials

Long-term investment deposits 22-1 363,362,287 262,111,277 367,460,407 263,357,576

Short-term investment deposits 243,124,274 298,715,458 426,675,727 299,377,289

Special Short-term investment deposits 5,052,890 4,870,589 5,053,890 5,146,889

Public servants savings (Employees’ share)

1,123,158 882,940 1,123,158 882,940

Public servants savings(Government’s share) 1,116,089 881,622 1,116,089 881,622

FC time deposits 68,800,183 55,021,705 68,800,183 55,021,705

Time deposits of branches abroad 59,025 163,500 59,025 163,500

Total 862,637,907 622,647,090 870,288,480 624,831,520

22-1- Long-term investment deposits include IRR 21,985 billion investment by individuals for Hajj pilgrimage, the profit of which have been calculated at 20%.

23. Other DepositsConstituents of the above entry are as follows:

Group Bank

March 20th

2016 March 20th

2015 March 20th

2016 March 20th

2015


Advances from customers for Rial LCs / private (23-1) 326,122 0 326,122 0

Advances from customers for FC LCs / public 11,973,084 12,782,086 11,973,084 12,782,086

Advances from customers due from Local FC LCs / private 4,132,648 7,881,260 4,132,648 7,881,260

Cash deposit for LGs – IRR/ private8,483,744 8,307,905 8,559,951 8,314,438

FC Cash deposit for LGs 2,692,783 2,539,902 2,692,738 2,539,902

Advances received from customers for Local LCs / private 230,160 633,412 230,160 633,412

Other 14,912,806 11,584,565 1,379 10,405

Total 42,751,303 43,729,129 27,916,083 32,161,502


122

23-1- The said amount mainly relates to sums received for L/Cs and time FC drafts (as detailed in the Note

11 of financial statements). Also advances items from customers are related to Rial and FC L/Cs due to loans

granted to the public and private sectors, as explanatory notes (10, 9).

24. Payable Tax


2016 March 20th

2015 March 20th

2016 March 20th


Balance at the beginning of the year 5,327,390 1,825,318 4,669,031 747,510

Reserve of tax for operations of the year 1,201,573 4,463,148 789,661 3,874,140

Preceding years tax reserves 8,503,555 3,894,444 8,310,478 3,894,444

Tax adjustments 61,689 433,428 (0) (0)

Settled during the year /period (9,111,432) (4,933,882) (8,417,436) (3,843,486)

Tax paid on-account (4,120,955) (355,067) (3,902,984) (3,577)

Balance at the end of the year 1,861,821 5,327,390 1,448,750 4,669,031

24-1. The Bank’s tax has been settled with the tax authorities until March 20th, 2010 and duly paid out. Summary of

tax status of the Bank for operations of the year 2011 up to March 20th, 2015 is as follows:

Year

Declared

Profit

(Loss)

Taxable

Income

Tax Balance

reserve

Balance

reserve Assessment

MethodDeclared Assessed Final Settled

March

20th, 2016 March 20th,

2015

2011 8,037,969 6,422,225 1,284,445 4,193,967 2,149,772 3,090,745 0 791 Audited books

2012 7,528,606 2,310,207 519,797 5,658,041 4,376,363 4,890,731 0 167,586 Audited books

2013 16,050,972 3,475,859 1,344,908 7,109,493 5,050,696 5,782,359 0 419,209 Audited books

2014 17,894,159 4,477,227 1,101,780 6,820,073 0 3,948,486 2,400,000 210,882 Audited books

2015 19,177,596 4,370,698 874,140 8,047,681 0 1,812,066 2,162,073 3,874,140 Unaudited

2016 13,179,119 3,948,304 789,661 0 0 0 789,661 0

Total 81,868,420 25,004,520 5,914,730 31,829,255 11,576,831 19,524,387 5,351,734 4,672,609

Less: Settled on-account tax (3,902,984) (3,577)

Grand Total 1,448,750 4,669,031

123

24-2. In consideration of contingent liability to the Iranian National Tax Administration, in addition to the reserved funds set out in the tax payable entry, the required reserves are available in the entries of other reserves.

24-3. With regard to the settlement of tax balance liabilities until March 20th, 2010, the relevant settlement slip for March 20th, 2010 was received.

24-4. On the strength of final tax assessment notice for the financial year ended on March 20th, 20110, bearing No. 2946323, dated March 08th, 2014, sum of IRR 2,149 billion was totally paid; nevertheless, whereas Supreme Tax Council reissued another final tax notice with an equivalent tax amount, and the case was objected by the chief auditor, the bank lodged a complaint to the High Administrative Tribunal. It is to be noted that according to the decision of Tax Dispute Settlement Board indicating acceptance of doubtful account costs in the year ended on March 20th, 2011, the Case was referred to the Tax Supreme Council, and the Bank has considered reserves in the accounts on the strength of such decision and upon assuming acceptability of doubtful account cost for the years ended on March 20th, 2012 through March 20, 2013.

24-5. On the strength of final tax assessment notice for the financial year ended on March 20, 2012, bearing No. 7955191, dated September 15th, 2014, sum of IRR 4,376 billion was demanded from the Bank, which was totally paid up; nevertheless, the Bank has objected to the issued award, and intends to lodge a complaint to the Minister of Economic Affairs and Finance incompliance with Article 251 of Direct Tax Act.

24-6- On the strength of final tax assessment notice for the financial year ended on March 20, 2013, bearing No. 21655466, dated February 20th, 2014, sum of IRR 5,051 billion was demanded from the Bank, in execution of legal regulations, the Bank objected and it is following up the case at the Tax Dispute Boards.

24-7- On the strength of final tax assessment notice for the financial year ended on March 20th, 2014, bearing No. 11220198, dated February 08th, 2015, sum of IRR 6,820 billion was demanded from the Bank, and in execution of legal regulations, the Bank objected and it is following up the case at the Tax Dispute Boards.

24-8- On the strength of final tax assessment notice for the financial year ended on March 20th, 2015, bearing No. 213937797, dated February 13th, 2015, sum of IRR 8,048 billion was demanded from the Bank, and in execution of legal regulations, the Bank objected and it is following up the case at the Tax Dispute Boards.


124

Group Bank

March 20th

2016 March 20th

2015 March 20th

2016 March 20th

2015


Loans received from NDF/ FC 25-1 119,471,532 62,290,189 119,471,532 62,290,189

Provisions of foreign branches 46,065 42,979 46,065 42,979

Provisions of Bank’s Pension Fund(Actuary) 25-2

7,899,922 8,173,922 7,899,922 8,173,922

Provisions for repurchasing leaves 3,095,143 1,195,143 3,095,143 1,195,143

Provisions of Personnel Expenses 168,128 415,525 168,128 415,525

Provisions of admin. Expenses 1,906 41,578 1,906 41,578

Provisions for bonuses of interest-free savings deposits

1,023,578 1,198,835 1,023,578 1,198,835

Tax reserve of previous years 186,670 3,860,554 186,670 3,860,554

Provisions of Deposits Guarantee Fund 25-3

822,209 1,704,170 822,209 1,704,170

Provisions of profit of Mouj plan 12,115,642 10,653,000 12,115,642 10,653,000

Other items 12,143,217 1,957,742 11,500,017 543,767

Total 156,974,011 91,533,636 156,330,811 90,119,662

25. Provisions & other dues

Provisions & other dues comprise the following items:

25-1- The receivable loans from the NDF including loans principal sum of IRR70,883 billion and sum of IRR 4,819 billion profit from the profit of the participation period.

25-2- The actuary provisions, according to the qualified actuary’s calculations, has been considered in the accounts and the amount regarded by the pension fund has not been recorded in the accounts due to objection to calculation procedures and assumption regarded by the bank’s selected actuary.

25-3- In execution of Article 7 and Clause 1 of Article 9 of Directive of the Amount and Procedure of Receiving the Deposits Guarantee Fund Membership Fee, as set out in the Resolution No. H4837T/100998, dated July 24th, 2013, approved by the Council of Ministers, sum of IRR 1,057 billion, including initial membership fee has been paid on account and sum of IRR 823 billion

125

26. Acceptance & endorsements

Bank

March 20th 2016 March 20th 2015


Liability for accepting time FC L/Cs and drafts 15,445,416 21,910,274

Loans received for refinance lines from foreign banks 44,711 47,419

Loans received from foreign branches for refinance lines 33,632 32,390

Total 15,523,759 21,990,083

was recorded in the accounts as provision. Further, according to the note 2 clause 9 of the said directive assigning amount of the membership fee of the financial institute is the duty of the Deposits Reserve Guarantee Fund.


126

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127

28. Severance provisions

The turnover of the account of the severance provisions is as follows:

Group Bank

March 20th

2016 March 20th

2015 March 20th

2016 September

2015


Balance at the beginning of the year 6,407,802 5,021,282 6,172,663 4,868,100

provisions secured for the year 2,762,253 1,584,844 2,620,317 1,472,515

Paid during the year (368,198) (198,324) (320,317) (167,952)

Balance at the end of the year 8,801,858 6,407,802 8,472,663 6,172,663

29. Capital

29-1.The Bank’s capital at the beginning of establishment was IRR 33,500 million (including 33,500,000 shares, each at par value of IRR 1,000), which through the following steps reached sum of IRR 40,000,000 million.

Capital Increase Finance Source

Date ofIncrease

% ofIncrease Amount New Capital

Amount


Revaluation of fixed assets 01.09.1993 1,706 571,500 605,000

Special Bonds – subject of Article (93) of3rd Development Plan 01.09.2001 104/8 634,000 1,239,000

Revaluation of fixed assets andconversion of FC assets & liabilities 10.08.2005 957/3 11,861,000 13,100,000

Shareholders’ Cash Contribution 26.04.2011 22/1 2,900,000 16,000,000

Retained earnings 24.06.2012 25 4,000,000 20,000,000

Revaluation of fixed assets 23.09.2012 65 13,100,000 33,100,000

Retained earnings 29.04.2014 20,8 6,900,000 40,000,000


128


# of Shares % # of Shares %

Provincial Justice Share InvestmentCompanies (PJSC) 11,999,999,797 30 11,999,999,797 30

Government of I.R. of Iran 6,800,0000,000 17 7,621,893,854 19.05

Social Security Org. 1,523,825,986 3,81 3,997,007,592 9.99

Bank Mellat Personnel Future SecurityFund 2,579,762,512 6,45 2,426,176,841 6.07

Saba Tamin Investment Co. (PJSC) 3,884,272,273 9,71 1,560,907,558 3.90

Mellat Financial Group Co. 1,353,802,496 1,534,781,637 3.84

Staff preferencial shares 0 0 1,534,781,637 3.05

Mehr logistic services Co. 663,239,006 1.66 0 0

Moin Atieh Khahan Cooperative Co. 1,160,575,223 2.90 710,575,223 1.78

Trans-Iran Distribution Co. 576,730,331 1.44 651,288,358 1.63

Shirin Asal Co. 483,397,223 1.21 483,397,223 1.21

Oil Pension Fund Investment Co. 484,632,277 1.21 484,632,277 1.21

Iran National Investment Co. 450,079,625 1.13 444,562,983 1.11

Mehran Kohan Tejarat Co. 0 0 422,733,678 1.06

Other shareholders 8,039,683,251 20.10 6,443,660,696 16.11

Total 40,000,000,000 100 40,000,000,000 100


Number of Shareholders: No. of Shares % No. of Shares %

Legal Entities 539 89.99 441 92.28

Natural Entities 54,958 10.01 46,987 7.72

Total 55,497 100 47,428 100

29-2. Composition of shareholders at the balance sheet date is as follows:

129

March 20 th

2016 March 20th

2015

Bank Bank


Paid-up capital 19,930,805 19,589,319

Legal reserve 17,612,269 15,158,355

Other reserves 11,650,546 2,159,140

Retained earnings 9,055,571 15,206,786

Total core capital 58,249,191 52,113,600

General provisions for NPLs and reserves for revaluationof fixed assets 35,145,740 32,110,762

Less: Tier 2 capital adjustments (0) (0)

Total suppliementary capital 35,145,740 32,110,762

Less: Investments (2,087,464) (2,087,464)

Total core capital after deduction of investments 91,307,467 82,136,898

Total risk-weighted assets (note 29-4) 1,206,123,582 936,006,289

Capital adequacy ratio (%) 7,57 8.78

29-3- Capital Adequacy Ratio

Capital adequacy ratio, which is obtained by dividing the Bank’s basic capital by risk weighted assets, as required by Basel Committee, subject of Approval No. BM/1967, dated February 19th, 2004, and Circular No. 353249 dated March 16th, 2010 has been calculated at the balance sheet date as detailed below

29-3-1. 10% net profit (legal stipulation of distribution of profit to shareholders) out of retained earnings at end of financial year was deducted and considered in calculation of the core capital.


130

29-4- Risk-weighted Assets

Assets Conversion Factor

Risk adjusted assets Assets Conversion

FactorRisk adjusted

assets

Million Rials Percent Million Rials Million Rials Percent Million RialsCash balance 18,844,735 - 0 0 15,709,484 - 0 0

Funds in transit 42,383 - 20 8,477 51,122 - 20 10,224

Receivables from central bank 154,277,322 - 0 0 128,116,592 - 0 0

Receivables from Banks 183,434,669 - 20 36,686,934 82,545,797 - 20 16,509,159

Receivables from Government 68,498,147 - 0 0 63,426,103 - 0 0

Public & central Bank bonds 3,146,055 - 0 0 1,540,683 - 0 0

Investments & partnerships (net) 27,886,633 100 27,886,633 27,274,620 - 100 27,274,620

Public loans (net) 170,634,302 0 0 232,928,570 - 0 0

Private loans, secured by the government (net)

992,346 0 0 1,151,961 - 0 0

Private loans 451,967,266 100 451,967,266 343,097,408 - 100 343,097,408

Housing loans 95,318,756 - 50 47,659,378 94,598,879 - 50 47,299,440

Outstanding receivables 37,028,340 - 100 37,028,340 46,767,992 - 100 46,767,992

Fixed assets 62,656,428 100 62,656,428 60,502,228 - 100 60,502,228

Debtors for time FC LCs & drafts 1,974,439 100 1,974,439 8,966,591 - 100 8,966,591

Other Assets 344,586,378 100 344,586,378 240,435,172 - 100 240,435,172

Total Assets 1,621,288,199 1,010,454,272 1,347,113,202 790,862,834Dues for LCs after deduction of advances

9,155,141 20 100 1,831,028 17,777,569 20 100 3,555,514

Dues for under 1 year guarantees after deduction of cash deposit

50,676,461 20 100 10,135,292 74,052,119 20 100 14,810,424

Dues for over 1 year guarantees after deduction of cash deposit

92,335,591 50 100 46,167,796 68,484,673 50 100 34,242,337

Other dues (private) 134,003,425 100 100 134,003,425 83,960,912 100 100 83,960,912

Other dues (corporate bonds) 14,125,181 50 50 3,531,295 34,295,181 50 50 8,573,795

Other dues (Inter-bank) 11,830 20 20 473 11,830 20 20 473

Other dues(public) 165,298,365 0 0 0 153,884,161 0 0 0

Total liabilities 465,605,994 195,669,309 432,466,445 145,143,455

Total Risk-weighted Assets 2,086,894,193 1,206,123,582 1,779,579,647 936,006,289

March 20th, 2016 Restated March 20th, 2015

131

30. Shares of Parent Company Owned by the Subsidiaries

Shares of parent company owned by the subsidiaries at the date of balance sheet are as follows:

31. Reserves

Balance of reserves includes the following items:

31-1- Discrepancy in the note of reserves is due to compliance with international standards of branches

abroad, and to this end, the branches’ auditors have given their confirmation.

32. Subsidiaries capital derived from revaluation surplus

Group



Fixed assets revaluation surplus 420,484 420,484

Total 420,484 420,484

March 20th ,2016 March 20th,2015

Cost Price No. of shares Cost Price

Mellat Financial Group Co. 1,574,965 2,003,187 1,353,802,496

Mellat Partnership Behsaz Co. 23 27 30,524

Behsazan Co. 29 29 28,882

Total 1,575,017 2,003,242 1,353,861.902

March 20th

2016March 20th

2015March 20th

2016March 20th

2015


Capital adequacy reserve 10,000,000 0 10,000,000 0

Local statutory reserve 19,318,459 16,458,918 17,481,795 15,036,245

statutory reserve abroad 130,475 122,110 130,475 122,110

Other Local statutory reserves 228,281 123,555 3,137 3,137

Other statutory reserve abroad 64,284 78,738 64,284 78,738

Total 29,781,498 16,783,320 27,679,690 15,240,229

Group Bank


132

33. FC translation difference of Foreign Branches statements


2016 March 20th

2015 March 20th

2016March 20th

2015


Difference due to conversionof FC Assets & Liabilities

3,419,795 3,580,406 1,583,125 2,077,265

Total 3,419,795 3,580,406 1,583,125 2,077,265

33-1. In execution of clause 4-A and 4-C of the Circular No. 1844/BM, dated January 12th, 2004, issued by the

Central Bank of I.R. of Iran, the difference of conversion of assets and liabilities of the branches abroad was

calculated and recorded in the accounts.

33-2. Increase in the difference due to conversion of FC Assets & Liabilities is due to exercising exchange rates

in the year 2016.

34. Minority interest



Capital 981,807 988,283

Reserves 78,617 52,077

Retained FC translation difference 943,970 780,808

Retained earnings(loss) 145,241 181,790

Total 2,149,636 2,002,957

133

35. Profit from granted loans


2016 March 20th

2015 March 20th

2016 March 20th


Installment sale 5,078,319 5,517,440 6,741,143 5,259,567

equity participation 38,913,900 33,184,153 38,913,900 33,184,153

Reward 1,513,190 1,835,882 1,513,190 1,835,882

Hire purchase 344,137 183,601 344,137 183,601

Capital bailment 4,656,433 3,756,417 4,656,433 3,756,417

Regular notified governmental loans

Receivable from government profit

165,295

12,144,471

186,048

9,796,000

165,295

12,144,471

186,048

9,796,000

Factoring 1,699,171 497,076 1,699,171 497,076

Rent-to-own 18,484,661 11,178,195 18,484,661 11,178,195

Forward purchasing 53 1,152 53 1,152

Retained portion of Loans in IRR 35-1 37,924,992 21,383,333 37,924,991 22,524,932

Total 120,924,622 87,519,297 122,587,445 88,403,023

35-1- Income from the delay payment charges of Loans in IRR is related to the deferred profit of restructured

loans and delay payment charges of participation bonds as well as loans.

36. Profit from Sales of goods & services

Group



Sales of FC by Mellat Exchange 16,078,842 18,262,862

Sales of goods 9,029,423 4,717,926

Profit from providing service 15,526,196 6,583,640

Other 262,128 887,420

Total 40,896,589 30,451,848


134

37. Profit from Investments & Deposits


2016 March 20th

2015 March 20th

2016 March 20th


Dividend from subsidiaries subject to consolidation 0 0 4,052,978 8,566,660

Profit de from investment inthe shares of companies 2,785,922 4,621,079 1,874,230 1,977,349

Total 2,785,922 4,621,079 5,927,208 10,544,009

Profit from investment deposit and bonds and legal deposits

16,546,257 13,766,473 15,732,866 18,316,498

Profit from sales of shares 0 462,210 0

Impairment losses (664) (632,123) (664) (9,192)

Profit from selling warrants 0 826,440 0 826,440

Profit from purchasing CDs of other bank 1,238,995 788 1,238,995 788

Net profit from investment in the shares of companies 20,570,510 19,044,867 22,898,405 29,678,543

37-1. Bank’s income from investment deposits and participation bonds is as follows:

Bank



Profit from deposits:

Profit from legal deposit (punctuality bonus) 999,735 905,984

Profit from deposits at banks 10,929,440 9,983,498

Total profit from deposits 11,929,175 10,889,482

Profit from investment in participation bonds 3,803,691 7,427,804

Total 15,732,866 18,317,286

135

38. Cost price of goods and services

Group


Million Rials Million RialsConsumable supplies 692,077 907,319

Direct wages 1,810,049 1,304,427

production surplus 1,250,956 851,377

Costs unabsorbed in production (14,510) (11,122)

Total production costs 3,738,572 3,052,001

Increase(decrease) in inventory of goods in progress (156,580) (103,576)

Wastage (1,345) (386)

Cost price of production 3,580,647 2,948,039

Purchase of finished goods 4,948,949 3,338,830

Increase(decrease) in inventory of produced goods 87,769 105,585

Cost price of sold goods 8,617,365 6,392,454

Cost price of rendered services 13,952,825 6,242,246

Cost price of sold FC 15,364,992 14,792,331

Cost price of sold goods 37,935,181 27,427,031

39. on-account Profit of Investment Deposits


2016March 20th

2015 March 20th

2016March 20th

2015

Million Rials Million Rials Million Rials Million RialsShort-term deposits profit: 41,773,614 30,208,614 41,773,614 30,208,614special short-term deposits profit 2,068,156 1,835,653 2,068,156 1,835,6531-year 55,869,949 30,369,035 55,868,481 30,367,5472-year 5,264,610 5,647,690 5,264,610 5,647,6903-year 1,455,730 1,415,074 1,455,730 1,415,0744-year 259,021 202,513 259,021 202,5135-year 21,555,974 23,349,655 22,732,359 22,882,264profit of 1-year CD 6,592,699 2,383,387 6,592,699 2,383,387Total 134,839,753 95,411,621 136,014,670 94,942,742

Note – Increase in the profit payable to the deposits is mainly due to increasing the deposits and profit payable to the current year and absorbing deposit at different rates.


136

39-1. On-Account profit of investment deposits are as Follows:

Bank

Year ended on

March 20th, 2016 Year ended onMarch 20, 2015

Regular short-term and housep u r c h a s e

10 7

3-month special short-term 17,5 14



1-year 18 22

2-year 18 22

3-year 18 22

4-year 18 22

5-year 18 22

Investment certificate of deposit 20 22

137

40. Difference of Final & On-Account Profits of Investment Deposits

The difference of final & on-account profits of time investment deposits of customers has been calculated as per Directive No, 22243/BM, dated April 26 th 2009, issued by Central Bank of I.R. of Iran, as follows:

40-1. The spread has been calculated as 0% of the average investment deposits (Bank’s approved spread for the year ending on March 20th, 2016 is 3%)


Average Joint allocotions Million Rials Million Rials

Granted loans 588,376,096 495,802,850Investments 73,258,756 62,217,670

Participation bonds 25,027,072 32,226,277

Total 686,661,924 590,246,797Less: Net depositors’ Resources:Ordinary Average short-term 336,653,550 268,965,651Special Average short-term 5,086,573 5,042,426Average 1-year 206,929,615 137,997,250Average 2-year 21,641,457 22,845,074Average 3-year 5,753,578 5,932,991Average 4-year 1,219,919 1,055,279Average 5-year 98,526,486 107,785,477Average investment deposits of other banks 42,128,585 17,878,010

Total average investment deposits 717,939,763 567,502,158Average legal deposit of investment deposits (76,375,196) (63,953,853)Net depositors’ resources 641,564,567 503,548,305Bank’s resources 45,097,357 86,698,492

Joint Income:Profit from granted loans 122,587,445 84,403,024

Profit from investments (Except for statutory deposit) 10,929,440 9,983,498

Profit from investments 10,969,231 18,789,061

Total joint profit 144,486,116 117,175,583depositors’ profit share 134,996,815 99,964,229Bonus of legal reserve of investment deposits 999,465 887,633Depositors’ profit 135,996,280 100,851,862Received spread (0) (14,187,554)

Profit payable to depositors 135,996,280 86,664,308On-account profit paid to depositors during year (Note 39) (136,014,670) (94,942,743)Deficit (surplus) of profit paid to depositors (18,390) (8,278,435)


138

41. Received profit & delay payment charges of non-joint income

Profit & D.P. charges Money of Non-Joint income are as follows:

Group BankRestated

March 20th, 2016March 20th

2015March 20th

2016 Restated

March 20th, 2015


Profit (branches abroad) 252,545 237,933 252,546 237,933

D.P. charges from other

receivables

2,126,449 11,463,024 2,134,055 4,522,968

D.P. charges granted FC loans/private (41-1)

348,343 1,428,666 348,348 1,428,666

Profit out of granted FC loans/ public

16,040,660 16,255,091 16,040,660 16,255,091

Profit out of FC investments and FC bonds

399,093 1,119,088 399,093 1,119,088

FC bonds 3,804,381 3,533,172 3,804,381 3,533,670

Other 1 23 1 23

Total 22,971,472 34,036,997 22,979,079 27,097,439

139

42. Commission received

Commissions received include the following items:

Group Bank March 20th,

2016 March 20th,

2015 March 20th,

2016March 20th,


Commission of issued LCs 117,139 335,712 117,139 335,712Commission of issued LGs 2,055,164 2,379,316 2,055,187 2,379,337Commission of received bills 242,836 212,818 242,836 212,818Bank drafts Commission (SHETAB) 2,054,541 1,505,383 2,054,541 1,505,383Commission of interest-free loans 1,050,749 1,019,864 1,050,749 1,019,864Commission of branches abroad 73 14 73 14Commission of public accounts 119,141 93,048 119,141 93,048Received Commission of loans of worn-out vehicles 1 34 1 34

Commission of current accounts (bouncedchecks) 99,707 81,193 99,707 81,193

Commission of insurance services 185,791 163,839 185,791 163,839 Commission of drafts in the local and foreign currency 485,021 403,169 485,022 403,169

Commission of bad checks 45,688 38,784 45,688 38,784 Commission of expert’s fee concerningplans 35,680 43,056 35,680 43,056

Commission of preparation of report oncredit data 20,813 27,166 20,813 27,166

Credit card subscription fee 4,202,921 8,784,512 4,202,921 8,784,512

Commission of securities sales agents

Other Banking Services

73

1,533,505

40

3,284,619

73

1,532,494

40

3,283,301Total 12,248,843 18,372,567 12,247,855 18,371,270

42-1- The commission of yearly subscription of money lending credit card and the profit related to money lending loans are reflected in the Note (35) (Profit of granted loans).


140

43. Other non-joint incomes


2016March 20th,

2015 March 20th

2016March 20th


Result of Local FC transactions 804,902 262,635 804,902 262,635Result of FC transactions (branches abroad) 33,514 12,271 33,514 12,271

Result of conversion of FC accounts 21,611,342 240,473 21,513,661 0

Miscellaneous incomes 43-1 2,491,259 3,000,927 2,689,696 1,650,619

Miscellaneous incomes(branches abroad) 7,731 9,311 7,731 9,311

Total 24,948,748 3,525,617 25,049,503 1,934,836

43-1. Miscellaneous incomes are as follows:


2016March 20th

2015 March 20th

2016March 20th


Post, Telegraph & Telephone 2,649 3,734 2,649 3,734Profit from disposing fixed assets& scraps 1,030,740 595,754 1,012,164 420,373

Income from rentals 33,426 22,354 33,427 22,354 Card Issuance 173,244 158,248 173,244 158,248Fee assets evaluation 303,674 232,048 303,674 232,048

Other 947,526 1,988,789 1,164,537 813,862

Total 2,491,259 3,000,927 2,689,695 1,650,619

44. Admin. & General Expenses


2016March 20th

2015 March 20th

2016March 20th


Personnel expenses 27,305,032 18,115,784 26,351,652 17,337,043 Other Admin. Expenses 13,098,719 9,555,450 13,131,738 9,725,655Total 40,403,751 27,671,234 39,483,390 27,062,698

141

44-1. Personnel expenses are constituted of the following items:


2016March 20th

2015 March 20th

2016March 20th


Payroll 3,936,760 3,272,125 3,178,594 2,689,840

Overtime allowance 3,068,490 2,593,434 3,068,490 2,593,434

Clerks’ deficit allowance 1,800,120 946,821 1,800,120 946,821

Balance sheet bonus 2,018,073 1,429,578 2,018,073 1,429,578

Other Allowances 2,209,816 1,484,737 1,604,284 1,381,582

Welfare & groceries & health 1,851,272 952,984 1,851,272 945,966

Savings & retirement 2,871,077 2,294,435 2,871,077 2,255,615

Personnel retirement costs 1,572,056 1,058,041 1,572,056 1,057,598

Bonus & benefits 515,232 464,088 515,233 464,088

Severance benefits 2,268,002 1,519,534 2,220,316 1,472,515

Commission plan 3,130,171 1,969,015 3,588,174 1,969,015

Leaves repurchase cost 1,982,820 49,382 1,982,820 49,382

Expenses of Expat staff 81,143 81,610 81,143 81,610

Total 27,305,032 18,115,784 26,351,652 17,337,043

44-2. Admin. Expenses are constituted of the following items:


2016March 20th

2015 March 20th

2016March 20th


Health & treatment 1,557,418 902,126 1,557,418 902,126

Contractual services 1,154,620 981,369 1,154,620 981,369

Software & bank system logistic expenses 1,077,148 758,192 1,077,148 758,192

Other Contractual services 44-2-1 1,593,092 1,522,070 2,313,231 2,379,044

Consumables & accessories 844,977 935,140 818,114 916,719

Communications and telecommunications 1,206,607 714,336 1,206,607 714,336Rentals and duties 407,858 371,273 395,431 317,815

Water, power & fuel 400,136 342,514 372,283 320,006

Traveling and mission 203,292 204,223 170,962 198,545

Calculating machines 243,455 266,191 243,456 266,191

Depreciation expenses 2,443,064 1,682,169 2,134,323 1,429,737

Other items 1,918,623 811,929 1,639,716 477,657

Admin. Expenses of branches abroad 48,429 63,918 48,429 63,918

Total 13,098,719 9,555,450 13,131,738 9,725,655

44-2-1- The figures in the contractual services are mainly related to advertisement expenses and other contracts of contractual services.


142

45. Doubtful loans expenses


2016March 20th

2015 March 20th

2016March 20th

2015

Million Rials Million Rials Million Rials Million Rials Specific expenses of doubtful loans (1,584,058) 4,069,918 (1,584,059) 4,069,917 General expenses of doubtful loans 2,287,455 1,052,232 2,589,862 890,426Total 703,397 5,122,150 1,005,803 4,960,343

45-1. specific expenses of doubtful loans is as detailed below:

Bank

Description Passed duedate Arrears Doubtful Total


Balance of granted loans at the end of the year 6,413,459 6,970,060 91,480,245 104,863,764

Less: Value of collaterals upon applying Coefficient:

Properties, deposits, real estates & machinery (3,143,939) (2,584,629) (15,812,153) (21,540,721)

Basic Balance used for calculation of specific provisions

3,269,520 4,385,431 75,668,092 83,323,043

Basic coefficient used for calculating specific provisions 10% 20%

50% up to100%

-

Specific provisions of doubtful loans

326,952 877,711 48,070,077 49,274,740

Bad debts /adjustments (0) (0) (2,222) 2,222

Specific provisions doubtful loans at the beginning of the year

(362,965) (923,048) (49,575,008) (50,861,021)

Expense of specific provisions of the current year

(36,013) (45,337) (1,502,709) (1,584,059)

143

45-2. General expenses of doubtful loans is as detailed below:

General provisions for doubtful loans have been calculated as follows:

Bank

March 20th, 2016

Million Rials

Balance of loans on 20 March, 2016 1,308,508,402

Less:

Balance of loans for which specific provisions has been considered (104,863,764)

Balance used as the basis for calculation of general provisions 1,203,644,638

General provisions for doubtful loans (1.5%) 18,054,670

Balance of general provisions for doubtful loans at the beginning of the year. (15,464,808)

General provisions for doubtful loans 2,589,862

46. Financial Expenses

Financial expenses are constituted of the following items:

Group BankMarch 20th

2016 March 20th

2015March 20th

2016 March 20th


Expense of loans received fromCentral Bank.

5,823,400 6,420,658 5,390,704 4,973,356

Expense of banking service fees 3,415,228 3,619,111 3,407,331 3,441,870

Total financial expenses 9,238,628 10,039,769 8,798,035 8,415,226

Profit paid to the FC deposits 6,790,748 5,258,213 6,790,748 5,258,213

Total financial expenses and profit

paid to FC deposits

16,029,376 15,297,982 15,588,783 15,588,783


144

47. Other Expenses

Group Bank

March 20th 2016

March 20th 2015

March 20th 2016

March 20th 2015


FX translation expenses 0 4,802,466 0 4,802,466Non-Interest-bearingaccounts bonuses 565,505 912,626 490,523 865,827

Total 565,505 5,715,092 490,523 5,668,293

47-1. By virtue of Article (2) of the Directive concerning bonuses to be granted to the non- interest-bearing savings deposits, approved by the enactment of 534th Meeting, dated August 04th, 1984 of the Money and Credit Council, the maximum amount to be used for granting bonuses to the holders of non- interest-bearing savings deposits will be designated by the Money and Credit Council.

48. Yearly Adjustments

48-1- Yearly adjustments include the following items:


2016March 20th

2015March 20th

2016March 20th


Foreign branches adjustments (102,267) (115,002) (102,267) (115,002)Actuary expenses 0 (274,000) 0 (274,000) Deposits Guarantee Fund Annualadjustments 0 (1,218,000) 0 (1,218,000)

Doubtful loans expenses Annualadjustments (1,760,000) (1,760,000) (1,760,000) (1,760,000)

Profit of receivables from governments Annual adjustments

0 3,968,691 0 3,968,691

Bonds retention money 0 1,193,718 0 1,193,718Tax cost (3,000,000) (4,030,000) (3,000,000) (4,030,000)

Fixed assets annual adjustments 0 (138,809) 0 (138,809)

Other items’ annual report 0 13,269 0 13,269

Adjustment from consolidation 863,786 295,699 0 0Total (3,998,481) (2,064,434) (4,862,267) (2,360,133)

145

48-2 - In order to provide a better view of financial statements, comparative items in relation to yearly adjustments and other classified adjustments have been restated as follows:

Description

Balance Before

Adjustment

2015

Classified Adjustments Annual Adjustments Adjusted

Balance-2015Debit Credit Debit Credit

Dues from CBI 160,214,833 0 2,711,023 0 0 157,503,810

Dues from banks andfinancial institutes

105,002,834 0 99,092 0 0 104,903,742

Loans &advances to public sector

244,446,078 0 26,533,407 0 0 217,912,671

Loans &advances to other parties

674,151,157 0 26,492,525 0 1,760,000 645,898,632

Dues for LCs and time drafts

13,157,925 10,706,890 0 0 0 23,864,815

Participation bonds & the like

14,194,139 0 7,288,997 0 0 6,905,142

Other assets 100,077,004 0 43,982,383 0 102,267 55,992,354

Dues to CBI (251,491,067) 107,137,812 0 0 0 (144,353,255)

Dues to the banks and financial institutions

(54,945,387) 99,092 0 0 0 (54,846,294)

Sight deposits (208,730,164) 3,589,000 0 0 0 (205,141,164)

Payable Tax (1,699,031) 0 0 0 3,000,000 (4,669,031)

Reserves and other liabilities

(86,530,662) 0 3,589,000 0 0 (90,119,662)

Acceptances and endorsements

(13,358,299) 0 8,631,784 0 0 (21,990,083)

Items in transit (26,188,014) 0 13,080,566 0 0 (39,268,580)

Other deposits (43,037,486) 10,875,984 0 0 0 (32,165,502)

Retained earnings (18,806,786) 0 0 4,862,266 0 (13,944,520)

Profits from investments and partnerships

(23,683,818) 0 5,994,725 0 0 (29,678,543)

Received profit and retained money

(43,833,497) 16,736,058 0 0 0 (27,097,439)

Granted loans profit (77,661,690) 0 10,741,334 0 0 (88,403,024)

Other incomes (2,727,299) 792,463 0 0 0 (1,934,836)

On- account payable profit

95,735,206 0 792,463 0 0 94,942,743

Total 149,937,299 (149,937,299) 4,862,266 (4,862,267)


146

49. Retained earnings at the year end

Legal assignments:

49-1- According to the Article 90 of the amendment to the commercial code, the Board of Directors propose 10% percent of net profit to be paid out as dividend.

50. Earnings per share

BankMarch 20th, 2016 March 20th, 2015


Earnings before tax deduction 13,179,118 19,177,596

Tax due (789,661) (874,140)

Earnings after tax deduction 12,389,457 18,303,456

Earnings per share (40,000 million shares)- Rial 310 458

GroupMarch 20th, 2016 March 20th, 2015


Earnings before tax deduction 11,949,552 16,125,646

Tax due (1,199,485) (1,446,957)

Earnings after tax deduction 10,750,067 14,678,689

Earnings per share (40,000 million shares)-Rial 278 382

147

51. Reconciliation Statement of earnings before Deduction of Income Tax

Reconciliation statement of earnings before deduction of income tax with net cash in-flow from operating activities is as follows:

Group BankRestated

March20th ,2016March 20th,

2015Restated

March20th ,2016March 20th,

2015

Operating Activities Million Rials Million Rials Million Rials Million Rials

Earnings before deduction of income tax 12,083,819 16,306,084 13,179,119 19,177,595

Depreciation expense 2,443,064 1,682,169 2,136,588 1,460,388 Profit from disposing tangible/intangible fixedassets (1,030,740) (595,754) (364,379) (420,373)

Total 13,496,143 17,392,499 14,951,328 20,217,610

Net increase (decrease) in operating liabilities

Liability to Central Bank 25,878,184 14,020,521 25,878,184 14,020,521

Liability to banks and credit institutes 25,822,033 4,730,896 25,822,033 4,730,896

Sight deposits 53,167,546 (59,845,497) 52,196,171 (58,225,914)

Savings deposits & the like 6,905,443 (2,542,193)6,906,163

(3,318,908)

Dues for accepting LCs time drafts (6,466,324) (3,413,001) (6,466,324) (12,044,785)

Other deposits 4,188,368 (8,427,049) (4,245,419) (7,622,207)

Provisions and other liabilities 63,581,875 17,156,073 69,885,033 19,163,610Time FC Investment Deposits 239,990,817 82,464,144 245,456,960 82,906,569Severance provisions 2,394,056 1,386,520 2,300,000 1,304,563Items in transit 3,718,371 26,188,015 3,718,371 26,188,015

Total 419,180,369 71,718,429 421,451,172 67,102,360

Net increase/decrease in operating assets

Dues from Central Bank (43,060,867) (56,007,766) (41,797,680) (56,007,766)

Dues from banks and credit institutes (112,965,990) 40,996,834 (112,981,217) 40,996,834

Dues from the Government (23,644,613) (8,830,024) (14,257,957) (8,830,024)

Granted loans and dues from public entities (51,401,542) 32,986,543 (46,593,542) 32,986,543

Granted loans and dues from private entities (172,437,937) (69,354,777) (165,570,496) (93,211,940)

Investments and partnerships (4,745,348) (3,279,181) (524,108) (2,962,249)

Acceptances and endorsements 6,369,329 3,361,806 8,573,912 11,864,113

Participating bonds and the like (381,971) 4,926,445 (2,725,276) 2,033,481

Other assets (9,046,326) (15,906,387) (38,421,895) (3,953,307)

Items in transit 0 5,703,491 0 5,703,491

Total (411,315,265) (71,106,507) (414,298,259) (71,380,824)

Cash in-flow from operating activities 21,361,247 18,004,421 22,104,241 15,939,146


148

52. Net Increase (Decrease) in the Cash

Net cash reflected in the cash flow statement is as follows:

Group Bank Group Bank

March 20th

2016 March20th 2015

March 20th 2016

March 20th

2015 Changes inMarch 2016

Changes inMarch 2016

Million Rials Million Rials Million Rials Million Rials Million Rials Million Rials

Cash 25,279,682 22,056,529 18,790,194 15,666,708 3,223,153 3,123,486

Current Account at CBI 1,558,709 273,841 1,558,709 273,841 1,284,869 1,284,869

Branches abroad Current Account at Central Bank

214,280 254,797 214,280 254,797 (40,517) (40,517)

Our Balance at Localbanks after clearing 283,361 366,810 283,361 366,810 (83,449) (83,449)

Balance of Local bankskept by us after clearing (92,492) (82,806) (92,492) (82,806) (9,685) (9,685)

Cash balance at the year end 27,243,540 22,869,171 20,754,052 16,479,349 4,374,368 4,274,703

54- Comparing the recommended percentages set out in Article (10) of supervising monetary and credit policies of CBI and credit operations for the year ending March 20th, 2016.

Economic Sector Recommended % Actualized %

Agriculture 20 2.61Industry and Mine 37 26.52Building & Housing 25 12.00Services and business 8 58.35Export 10 0.52Total 100 100

53. Non-Cash Transactions

Major non-cash transactions during the year are as follows:

GroupMarch 20th, 2016 March 20th, 2015


Mellat Financial Group Co. 52,291 2,970,068

Mellat Behsaz Partnership Co. 1,734,388 146,260

Fanavaran Hushmand Behsazan Farda Group Co. 2,031,125 120,857

Total 3,817,804 3,237,185

149

55. Contingent liabilities

Balance of the contingent liabilities on the date of balance sheet, includes the following items:


2016 March 20th

2015March 20th

2016 March 20th


Party to liabilities for LCs 40,166,498 49,953,647 40,166,498 49,953,647

Party to liabilities for LGs 143,012,052 142,536,792 143,012,052 142,536,792

Party to other liabilities 310,747,865 269,514,606 310,747,865 269,514,606 Party to managed funds & thelike 131,016,861 107,064,266 131,016,861 107,064,266

Total 624,943,276 569,069,312 624,943,276 569,069,312

55-1. Constituents of contingent liabilities due to L/Cs are as follows:


2016 March 20th

2015 March 20th

2016 March 20th


Liabilities due to opened LCs 37,520,156 43,766,899 37,520,156 43,766,899

Branches’ liabilities due to opened LCs by branches abroad 3,280 2,960 3,280 2,960

Liabilities due to opened Local LCs 2,643,062 6,183,788 2,643,062 6,183,788

Total 40,166,498 49,953,647 40,166,498 49,953,647

55-2. Contingent liabilities for issued guarantees and acceptances are as follows:


2016 March 20th

2015 March 20th

2016 March 20th


Bank’s liabilities for issued guarantees and acceptances in IRR

97,716,918 94,408,548 97,716,918 94,408,548

Bank’s liabilities for issued guarantees and acceptances in FC 39,727,855 42,420,529 39,727,855 42,420,529

Branches’ liabilities for issued guarantees 41,544 126,591 41,544 126,591

Branches’ liabilities for issued counter-guarantees in FC 5,525,734 5,581,124 5,525,734 5,581,124

Total 143,012,052 142,536,792 143,012,052 142,536,792


150

55-3. Constituents of other Contingent liabilities are as follows:


2016 March 20th

2015 March 20th

2016 March 20th

2015 Million

Rials Million

Rials Million

Rials Million

RialsLiabilities for contracts concluded with Management & Planning Org. 1,757,233 1,627,881 1,757,233 1,627,881

Liabilities for FC contracts concluded 12,165 11,824 12,165 11,824Liabilities for concluded transactions contracts 130,414,970 79,822,056 130,414,970 79,822,056

Liabilities for rescheduling debts. 2,519 2,519 2,519 2,519Bank’s Liabilities for guaranteeing bonds 24,125,181 44,295,181 24,125,181 44,295,181

Bank’s Liabilities for credit cards 3,235,798 3,785,145 3,235,798 3,785,145Bank’s Liabilities for received funds from National development Fund / FC 151,200,000 139,970,000 151,200,000 139,970,000

Total 310,747,865 269,514,606 310,747,865 269,514,606

55-4. Administered funds and the like are as follows:


2016 March 20th

2015 March 20th

216 March 20th

2015


Loans granted out of managed funds 2,029,009 1,957,137 20,29,009 1,957,137

Unused managed funds 300,027 317,318 300,027 317,318

Loans granted out of inter-bank funds 11,830 11,830 11,830 11,830

Loans granted out of special non-interest-bearing deposit

350,070 351,192 350,070 351,192

Loans granted out of special Non-interest-bearing deposit

128,325,925 104,426,789 128,325,925 104,426,789

Total 131,016,861 107,064,266 131,016,861 107,064,266

56. Post Balance Sheet Events

There have been no material post balance sheet events that would require disclosure or adjustment to these financial statements.

151

57. Capital commitments, Contingent assets & Liabilities

57-1- The Bank’s Capital commitments at the Balance Sheet date include: Hotel Mashhad Moghadas (Mellat Grand Hotel), for IRR 100 billion and Elgoli of East Azarbaijan, for IRR 20 billion. Due to numerous capital commitments, we have avoided from mentioning all of them.

57-2- Contingent liabilities of subsidiaries on the balance sheet date are as follows:

Description Related to Company March 20th, 2016

Million Rials

Acting as market maker for bonds of the ‘’ developing mine and mineral industries holding company’’

Mellat Financial Group 2,650,000

For the trilateral contract among Bank Mellat, Mellat leasing & Saipa


Our security instruments held with others Mellat Financial Group 1,582,419

For guaranteeing the credits allocated to Behsaz Business Services Development Co.


Bank Mellat Shares kept in trust, owned by Pars Fund Mellat Financial Group 884,775

Guaranteeing purchase contract of Oxin sheet and Slab by ‘’ Petro Fanavaran Atlas company’’

Mellat Financial Group 856,950

For equity participation contract with Bank Tejarat Mellat Financial Group 260,000

Security instruments received from other companies Mellat Financial Group 29,242

Bank guarantees provided to the Central Bank Mellat Financial Group 14,000

Bank guarantees provided to Mercantile Exchange Mellat Financial Group 6,000

Bank guarantees given to stock exchange Mellat Financial Group 5,730

Goods future contract Mellat Financial Group 1,000

Guaranteeing loans of the subsidiaries Behsaz Mosharekatha Mellat 589,305

Our security instruments held with others Behsaz Mosharekatha Mellat 1,320,191

Promissory notes presented to the Ministry of Finance and companies

Behsaz Mosharekatha Mellat 101

Guaranteeing execution of obligations and contracts Behsaz Mosharekatha Mellat 280,844

Security instruments of Yas Arghavani Co. held with contractors

Fnavaran HoushmandBehsazan Farda Group

692,743

Total 19,625,837


152

58- Transactions with the subsidiaries

58-1. Bank’s transactions with the subsidiaries during the financial year are as follows:

Transactions are subject to Article (129) of Commercial Code, as amended

Transaction counterparty Affiliation type Transaction

description

Transaction amount

Million Rial

Receivable/payable Balance at year end

Million Rial

Mellat Financial Group Joint board member Received loans 300,000 (11,332,393)

Fanavaran Houshmand Behsazan Fard Co. Joint board member

Providing services 2,820,763 0

Received loans 1,841,147 0

Maa Insurance Co. Joint board member Selling insurance policies 919,350 282,451

Mellat investment bank Joint board memberLease purchase

facilities377,266 11,971

Behsaz Mellat Design And Plan Joint board member NPL collection 612,583 43,099

Tadbirgaran Co. Joint board member Leasing offices & loans repayment (8,747) 23,185

Houshmand Behsaz Farda Joint board member Selling goods,

services and loans 4,661,910 3,770,565

Behsazan Mellat Co. Joint board member Buying & Selling goods 2,791,277 (1,856,080)

Yas Arghavani System Engineering Co. Joint board member Buying & Selling

goods 605,596 126,762

Tadbirgaran Co. Joint board member Leasing offices & loans repayment 14,769 23,185

Leasing Co. Joint board member Leasing 51 (51)

153

Million Rials

Transaction Counterparty Affiliation Transaction Transaction

Amount Receivable/payable Balance at year end

Mellat financial group:

Alborz Insurance Co. JointShareholder

Reinsuranceoperation

1,128 (1,134)

Sepahan Oil Co, Shareholder Sales ofinsurance policy

148 (0)

Iran Zamin Investment Fund Same Group Transaction ofsecurities

91,421 (0)

Atieh Mellat InvestmentFund

Same Group Transaction ofsecurities

842,373,872 1,648

Andoukhteh MellatInvestment Fund

Same Group Transaction ofsecurities

2,158,306 (0)

Bank Mellat BrokerageFunds

Same Group Fund operation 89,620 349

Atiyeh Khahan investment fund

Joint board member

Participation Fund

32,783 349

Kheradmandan SaberCompany

Same Group On-accountvehicle delivery

3,900 (18,960)

Mianeh Azarbayjan Steelplant

Same Group Buying assetsand Services

638 638

Atiyeh Khahan InternationalTrade

Same Group FC Buying and selling

148,745 0

Satrab Rahjou Co. Joint boardmember

On- accountreceivable

300 (300)

Toseeh Moein InvestmentCo.

Same Group Shares profit 0 840

Behsazan Farda Company

Adonis Co. Same Group Buying goods and services

147,646 0

BehsazanMosharekatha

Darya Sazan Bahman Co. Same Group Buying goodsand services

12,293 0

58-2. Bank’s transactions with the affiliate companies (except for those subject to consolidation) during the period under report:


154

58-2. Bank’s transactions with the affiliate companies (except for those subject to consolidation) during the period under report:

Million Rials

Transaction Counterparty Affiliation Transaction TransactionAmount

Receivable/payable Balance at year end

Mellat financial group:

Alborz Insurance Co. JointShareholder

Reinsuranceoperation 1,128 (1,134)

Sepahan Oil Co. Shareholder Sales ofinsurance policy 148 (0)

Iran Zamin Investment Fund Same Group Transaction ofsecurities 91,421 (0)

Atieh Mellat Investment Fund Same Group Transaction ofsecurities 842,373,872 1,648

Andoukhteh Mellat InvestmentFund Same Group Transaction of

securities 2,158,306 (0)

Bank Mellat Brokerage Funds Same Group Fund operation 89,620 349

Atiyeh Khahan investment fund Joint board member

Participation Fund 32,783 349

Kheradmandan Saber Company Same Group On-accountvehicle delivery 3,900 (18,960)

Mianeh Azarbayjan Steel plant Same Group Buying assetsand Services 638 638

Atiyeh Khahan InternationalTrade Same Group FC Buying and

selling 148,745 0

Satrab Rahjou Co. Joint boardmember

On- accountreceivable 300 (300)

Toseeh Moein Investment Co. Same Group Shares profit 0 840

Behsazan Farda Company

Adonis Co. Same Group Buying goods and services 147,646 0

Behsazan Mosharekatha

Darya Sazan Bahman Co. Same Group Buying goodsand services 12,293 0

155

Transaction Counterparty Affiliation Transaction Transaction

Amount

Balance of Receivables/

Liability until the end of year

Mellat Financial Group

Mellat Leasing

Subsidiary

Provide services 2,488,606 (450,027)

Bank Mellat Supply Investment Provide services 46,982 0

Bank Mellat Supply Investment Received lease purchase 22,382 0

Mellat exchange Co. FC Buying and Selling 2,488,606 (450,027)

Ma Insurance Co. Sales of insurance policies 754,833 282,451

Ma Insurance Co. Participating in profits 161,686 0

Ma Insurance Co. lease the branches 3,831 0

Bank Mellat Brokerage Co. Securities transaction 1,071,060 0

Tadbirgaran Behsaz Mellat Co. Leasing provinces offices 3,011 (206)

Tadbirgaran Behsaz Mellat Co. Payment of installments of loans 11,758 23,391

Behsaz Mellat Design & planning Collection of outstanding recceivables 612,583 43,099

Behsaz insurance services Leasing office 313 1,035

Toseeh Mizan Andishe Co. Provide services 490 0

Mellat Partnership Behsaz Co.

Behsazan Mellat Co.

subsidiary

Providing services 860,452 0

Behpardakht Mellat Co. Providing services 215,579 0 Yas arghavani engineeringsystem Co. Providing services 547,436 0

Shaghayegh softwareengineering Co. Providing services 80,178 0

Yas arghavani engineeringsystem Co. Providing services 41,091 0

Zir Sakhte Amn transactionservices Co. Providing services 273,741 0

Fanavaran Hushmand Behsazan Farda Group Co.

Behsaman Mellat Services Providing Services 303,540 25,392

Behsaz Industry Router Issued Account statements 21,992 (38,557)

Bank Mellat Publication Providing Publication Services 370,281 0

Krep Naz subsidiary Chador Purchas 7,350 (0)

Jahan Behsaz Mofarrah Provide Services 137,574 0

Maad Development, Marketing & purchase Issued Account statements 33,001 (0)

Bonyan Marsous Foundation Goods & Services Purchas 199 (0)

58-4. Transactions with affiliates have been conducted according to fair value.

58-3. Transactions of parent company with affiliates are as follows:


156

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7 B

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r c

ontra

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ith M

anag

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anni

ng O

rg.

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k’s

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cont

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DF

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0

59- F

orei

gn C

urre

ncy

Posi

tion

Ass

ets

and

liabi

litie

s m

onet

ary

and

Loca

l FC

obl

igat

ions

are

as

follo

ws:

157

59-1- “Other” in the assets section is mainly related to the FC account of foreign branches.

59-2- The Bank has always complied with the provisions of Clause (2) of directive related to supervising regulations and control of foreign currency position, as set out in the directive No. 1345BM, dated March18th, 2002, issued by the CBI, indicating authorized limit of open foreign currencies position being maximum 10% for each single foreign currency and for the aggregate foreign currencies 30% of the base capital. Nevertheless, due to some reasons, including translation of the Bank’s FC liabilities in consideration of FC reserve account with the account receivables from the Government and impossibility of transactions with international banks due to sanctions imposed on the CBI, the Bank was unable to comply with the limits in conversion of foreign currencies into one another.


158