Convenience translation into english

(*) Of the “Amount subject to market risk”, only TL142,407 (8% of TL1,780,091) is used in the calculation of the market risk related to the capital adequacy ratio which is given in Section four, note II. TL142,407 is the minimum amount of capital that can hedge the mentioned risk.

V. CURRENCY RISK
The difference between the Bank’s foreign currency denominated and foreign currency indexed assets and liabilities is defined as the “Net Foreign Currency Position” and is the basis of currency risk. Foreign currency denominated assets and liabilities, together with purchase and sale commitments, give rise to foreign exchange exposure. This risk is managed by using natural hedges that arise from offsetting foreign currency denominated assets and liabilities and the remaining open foreign exchange exposures are hedged on a portfolio basis with derivative financial instruments that include primarily forward foreign exchange contracts and currency swaps. The Board, taking into account the recommendations by ERC, sets a limit for the size of foreign exchange exposure, which is closely monitored by ALCO.
The Bank’s foreign exchange bid rates as of the date of the financial statements and for the last five days prior to that date:
USD EURO Yen

Balance Sheet Evaluation Rate TL 1,330,000 TL 1,626,457 TL 12,804

1. Day bid rate TL 1,290,000 TL 1,571,220 TL 12,213

2. Day bid rate TL 1,295,000 TL 1,565,396 TL 12,266

3. Day bid rate TL 1,307,000 TL 1,585,391 TL 12,361

4. Day bid rate TL 1,300,000 TL 1,578,980 TL 12,287

5. Day bid rate TL 1,290,000 TL 1,590,570 TL 12,088
The simple arithmetic average of the Bank’s foreign exchange bid rates for the last thirty days preceding the balance sheet date for major foreign currencies are shown in the table below:
USD : TL 1,301,033

EURO : TL 1,606,328

Yen : TL 11,994
As of 31 December 2003:

USD EURO Yen

Balance Sheet Evaluation Rate TL 1,427,500 TL 1,784,660 TL 13,346

Information on the Bank’s currency risk:
The table below summarizes the Bank’s exposure to foreign currency exchange rate risk, categorized by currency. Foreign currency indexed assets, classified as Turkish lira assets according to Uniform Chart of Accounts, are considered as foreign currency assets for the calculation of Net Foreign Currency Position. Therefore, the difference between the sum of the foreign currency assets in the following table and in the balance sheet is equal to the sum of foreign currency indexed assets. The Banks’ real position, both in financial and economic terms, is presented in the table below:

			EURO	USD	Yen	Other FC (*)	Total
Current Period – 31 March 2004
Assets
Cash (cash in vault, effectives, money in transit, cheques purchased) and balances with the Central Bank of Turkey			37,076	45,894	97	4,257	87,324
Due from other banks and financial institutions (**)			349,071	502,804	1,616	49,313	902,804
Trading securities			149,802	4,492,148	-	-	4,641,950
Available-for-sale securities			7,255	2,025,008	-	-	2,032,263
Loans			921,380	3,735,529	-	9,293	4,666,202
Subsidiaries, investments and associates			81,352	-	-	91,730	173,082
Held-to-maturity securities			-	644,765	-	-	644,765
Property and equipment			6,043	-	-	-	6,043
Goodwill			-	-	-	-	-
Other assets			693,679	1,044,884	26	251	1,738,840
Total assets			2,245,658	12,491,032	1,739	154,844	14,893,273
Liabilities
Bank deposits (**)			106,689	936,089	6	48,429	1,091,213
Foreign currency deposits			3,921,186	5,985,947	2,818	447,883	10,357,834
Funds borrowed			59,517	3,197,679	-	-	3,257,196
Marketable securities issued			-	-	-	-	-
Miscellaneous payables			7,862	11,007	7,674	1,884	28,427
Other liabilities			40,722	194,764	232	6,879	242,597
Total liabilities			4,135,976	10,325,486	10,730	505,075	14,977,267
Net On Balance Sheet Position			(1,890,318)	2,165,546	(8,991)	(350,231)	(83,994)
Net Off Balance Sheet Position
Financial derivative assets			2,234,253	167,248	10,633	235,168	2,647,302
Financial derivative liabilities			117,044	2,412,909	2,054	11,008	2,543,015
Non-cash loans			577,490	788,017	24,666	8,711	1,398,884
Prior Period – 31 December 2003
Total Assets			3,006,827	14,938,774	4,129	155,216	18,104,946
Total Liabilities			5,189,522	12,407,344	6,593	530,832	18,134,291
Net On Balance Sheet Position			(2,182,695)	2,531,430	(2,464)	(375,616)	(29,345)
Net Off Balance Sheet Position			2,416,017	(2,459,652)	1,521	245,775	203,661
Non-cash loans			438,578	762,311	1,943	9,983	1,212,815