RNS Number:1609P
Turk Ekonomi Bankasi A.S.
29 August 2003


PART 2



                                  SECTION FIVE



        FOOTNOTES AND EXPLANATIONS ON CONSOLIDATED FINANCIAL STATEMENTS



I.                   Footnotes and Explanations Related to the Consolidated
Assets



1.         Information related to the account of the Central Bank of Turkey:


                                                                             Current Period     Prior Period

Demand Unrestricted Amount                                                           13,468           16,498
Time Unrestricted Amount                                                            351,960          365,633
Total                                                                               365,428          382,131


2.         Additional information of trading portfolio ( stated at net values ):

a)     Trading securities given as collateral or blocked: None.

b)    Trading securities subject to repurchase agreements:


                                                                    Current                 Prior Period
                                                              Period
                                                               TL           FC            TL           FC

Government bonds                                           19,206            -        18,645            -
Treasury bills                                              1,349            -         6,321            -
Other debt securities                                           -            -             -            -
Bank bonds and Bank guaranteed bonds                            -            -             -            -
Asset backed securities                                         -            -             -            -
Other                                                           -            -             -            -
Total                                                      20,555            -        24,966            -



5.         Information on available for sale portfolio:



a)     Main types of available for sale securities: public sector debt
securities, and other marketable securities and share certificates.



b)    Information on available for sale portfolio:


                                                                           Current Period       Prior Period
Debt securities                                                                    29,018             18,790
Quoted in a stock exchange                                                          6,571                  -
Not quoted                                                                         22,447             18,790
Share certificates                                                                      8                 10
Quoted in a stock exchange                                                              -                  -
Not quoted                                                                              8                 10
Provision for impairment (-)                                                            -                  -
Total                                                                              29,026             18,800


c)       Available for sale securities given as collateral or blocked: None.

d)    Information on investment securities available-for-sale given as
collateral or blocked : None

e)     Information on investment securities available-for-sale subject to
repurchase agreements: None.

4.         Information on loans :



a)     Information on all types of loans and advances given to shareholders and
employees of the Bank:


                                          Current Period              Prior Period
                                       Cash Loans     Non-Cash     Cash Loans    Non-Cash
                                                         Loans                      Loans
Direct loans granted to shareholders       62,662        1,193        112,564       7,502
Corporate shareholders                     62,662        1,193        112,564       7,502
Real person shareholders                        -            -              -           -
Indirect loans granted to                       -            -              -           -
shareholders
Loans granted to employees                    703           13            839           -
Total                                      63,365        1,206        113,403       7,502



b)    Information about the first and second group loans and other receivables
including loans that have been restructured or rescheduled:


                                                                      Loans and Other Receivables Under
                                                                              Close Monitoring
                                Standard Loans and Other Receivables
                                Loans and Other    Restructured or   Loans and Other   Restructured or
                                  Receivables        Rescheduled       Receivables       Rescheduled
          Cash Loans
Non-specialized loans                  1,304,356                   -             547               4,305
Discount notes                            35,822                   -               -                   -
Export loans                             455,678                   -               -                   -
Import loans                                   -                   -               -                   -
Loans given to financial sector          108,132                   -               -                   -
International loans                       77,988                   -               -                   -
Consumer loans                            23,785                   -               -                   -
Credit cards                              16,415                   -               -                   -
Precious metals loans                      5,422                   -             547                   -
Other                                    581,114                   -               -               4,305
Specialized loans                              -                   -               -                   -
Other receivables                              -                   -               -                   -
Total                                  1,304,356                   -             547               4,305



c)       Information on consumer loans:


                                     Short Term Medium and Long Term            Total    Interest Income
                                                                                                 Accrual
Consumer loans-TL                         8,753                5,712           14,465                427
Real estate loans                           153                1,000            1,153                 30
Automotive loans                          1,693                4,535            6,228                138
Consumer loans                                -                    -                -                  -
Personnel loans                             634                   40              674                 19
Other consumer loans                      6,273                  137            6,410                240
Consumer loans- Indexed to FC             1,628                7,692            9,320                 42
Real estate loans                           193                2,445            2,638                 10
Automotive loans                            660                5,068            5,728                 24
Consumer loans                              489                  179              668                  8
Personnel loan                               13                    -               13                  -
Other consumer loans                        273                    -              273                  -
Credit cards                             16,415                    -           16,415                  -
Total Consumer Loans                     26,796               13,404           40,200                469



d)    Domestic and foreign loans:


                                                                          Current Period     Prior Period
Domestic loans                                                                  1,215,529          1,354,484
Foreign loans                                                                      93,679            104,170
Total                                                                           1,309,208          1,458,654



e)     Loans granted to subsidiaries and investments: None.



f)        Specific provisions provided against loans:


                                                                          Current Period     Prior Period
Specific provisions
Loans and receivables with limited collectibility                                     104                 70
Loans and  receivables with doubtful collectibility                                   254                200
Uncollectible loans and receivables                                                14,708             16,775
Total                                                                              15,066             17,045



g)    Information on loans under follow-up account (Net) :



g.1)     Information on loans and other receivables included in loans under
follow-up account which are restructured or rescheduled: None.



g.2)     The movement of loans under follow-up:


                                                            III. Group       IV. Group         V. Group
                                                                             Loans and
                                                                            receivables
                                                            Loans and      with doubtful
                                                         receivables with  colectibility
                                                             limited                        Uncollectible
                                                          collectibility                      loans and
                                                                                             receivables

Prior period end balance                                1,017              400              21,159
     Additions (+)                                      673                -                1,767
     Transfers from other categories of loans under                        1,108            328
follow-up (+)
     Transfers to other categories of loans under       1,108              328              -
follow-up  (-)
     Collections (-)                                    85                 56               2,144
     Write-offs (-)                                     -                  -                29
     Index differences (-)                              144                40               2,252
Current period end balance                              353                1,084            18,829
    Specific provisions (-)                             105                253              14,708
Net Balances on Balance Sheet                           248                831              4,121



g.3)     Information on foreign currency loans and other receivables under
follow-up:


                                            III. Group:          IV. Group:           V. Group
                                             Loans and           Loans and
                                          receivables with    receivables with
                                              limited             doubtful      Uncollectible loans
                                           collectibility      colectibility      and receivables
Period end balance                               -                   -                   35
Specific provisions (-)                          -                   -                   35
Net Balances on Balance Sheet                    -                   -                   -


h)        Liquidation policies for the uncollectible loans and other receivables:



The loans and other receivables decided to be uncollectible are written off from
the assets according to the Tax Law by the decision of the top management in
accordance with the "Communique on Methods and Principles for the Determination
of Loans and Other Receivables to be Reserved for and Allocation of Reserves"
related to the clause 12 of article 11 and clause 11 of the article 3 of the
Bank Law 4389 changed by the laws 4672 and 4491and announced at the Official
Gazette numbered 24448 and dated June 30, 2001.



5.             Information on held to maturity portfolio (Net) :



a)     Information on held to maturity portfolio:


                                                                           Current Period       Prior Period

Debt securities                                                                    41,161             44,168
Quoted in a stock exchange                                                         40,013             44,168
Not quoted                                                                          1,148                  -
Provision for impairment (-)                                                            -                  -

Total                                                                              41,161             44,168



b)    Movement of Held to Maturity Portfolio:


                                                                           Current Period       Prior Period

Beginning balance                                                                  44,168             98,814
Effect of inflation (-)                                                             4,182             23,373
Foreign currency differences on monetary assets                                     (613)              5,890
Purchases during year                                                               2,437             44,168
Disposals through sales and redemptions                                             (469)           (81,331)
Impairment provision                                                                (180)                  -

Closing Balances                                                                   41,161             44,168



c.1)      Information on accounts in which investment securities
held-to-maturity are recorded:


                                                  Current Period                    Prior Period
                                         Historical Cost     Valuation    Historical Cost     Valuation
                                           TL       FC       TL      FC     TL      FC      TL      FC
Held to Maturity Portfolio
Given as collateral or blocked            38,649   1,364  37,841   1,392   41,002       -  41,817       -
Subject to repo transactions                   -       -       -       -        -       -       -       -
Held for structural position                   -       -       -       -        -       -       -       -
Receivables from securities lending            -       -       -       -        -       -       -       -
Other (*)                                      -   1,148       -   1,223        -   3,166       -   3,240
Collaterals on securities lending              -       -       -       -        -       -       -       -
Closing Balances                          38,649   2,512  37,841   2,615   41,002   3,166  41,817   3,240



(*) The free marketable securities held by the Group is stated at the Other
line.





c.2)      Marketable securities held to maturity given as collateral consist of
public sector debt securities of TL 40,013, given as collateral for statutory
requirements.




Securities held-to-maturity given as collateral or blocked


                                               Current Period                   Prior Period
                                                  TL             FC            TL            FC
Share certificates                                   -             -             -             -
Bonds and similar investment securities         40,013             -        41,002             -
Other                                                -             -             -             -
Total                                           40,013             -        41,002             -



c.3)      Securities held-to-maturity subject to repurchase agreements : None.



c.4)      Securities held-to-maturity held for structural position: None.



6.         Information on investments (Net):



a.1)      Information on unconsolidated participations :


                                                                      Bank's share
                                                                     percentage-If
                                                   Address          different voting    Group's risk group
                                                                     percentage(%)       share percentage
                 Description                   (City/ Country)                                 (%)

Varlik Yatirim Ortakligi A.S.                 Istanbul /Turkey           24.40                31.58



a.2)      Information on investments as presented in table a.1:(*):


                                                      Marketable     Current
                                                      Securities     Period
  Total         Total         Total       Interest      Income     Income/Loss Prior Period
   Assets                                  Income                               Income/Loss
                Equity    Fixed Assets                                                       Fair Value
   1,400        1,376           5            -             -            6           55         1,020



(*)       The financial statements of Varlik Yatirim Ortakligi A.S. are prepared
in accordance with the Capital Market Board Regulations. The current period data
is presented as of June 30, 2003 and the prior period income / loss amounts are
presented with their nominal values as of December 31, 2002.



a.3)      Out of Group members / shareholders who has the control power with the
parent company and/or other members of the financial group are explained: 66%
shares of the unconsolidated participation Varlik Yatirim Ortakligi A.S. is
publicly traded.



a.4)      The reason for not consolidating the unconsolidated participations and
the method of recording  the unconsolidated participations at the Parent Bank's
financials: The participation is not consolidated due to materiality principle,
is quoted at the stock exchange and is valued by fair value.


b)    Information on the consolidated participations:



b.1)     Information on the consolidated participations:



                                                                                                       
                                                                          Current Period   Prior Period
                Balance at the beginning of the period                             5,931          4,749
                Movements during the period                                            -          1,182
                Purchases                                                              -            749
                Free shares obtained profit from current year's share                  -            433
                Dividends from current year income                                     -              -
                Sales                                                                  -              -
                Revaluation increase                                                   -              -
                Provision for impairment                                               -              -
                Balance at the end of the period                                  5,931          5,931 
                Capital commitments                                                                    
                Share percentage at the end of the period (%)                     %50.00         %50.00
 

b.2)     Valuation of investments made to the consolidated participations:



                                                                                            
                                                             Current Period    Prior Period 
                            Valuation with cost                        5,931           5,931
                            Valuation with fair value                      -               -
                            Valuation with equity method                   -               -
                            Total                                     5,931           5,931 


The above mentioned participation is stated at cost at the unconsolidated
financial statement of the Parent Company Bank.



b.3)     Sectoral information and the related carrying amounts on consolidated
investments:

                          Participations                          Current Period   Prior Period
                          Insurance companies/TEB Sigorta A.S.             5,931          5,931
                          Total                                           5,931          5,931 
b.4)     Investments which are quoted to a stock exchange: None.



b.5)     Information related to investments that are included in consolidation:


                                                Bank's share
                                                percentage-If
                          Address (City /     different voting    Group's risk group     Method of
                             Country))          percentage(%)      share percentage    Consolidation
      Description                                                        (%)
          TEB Sigorta    Istanbul / Turkey          50.00               50.00               Full
A.S.



Since the management of the company is controlled by the Parent Bank, line by
line consolidation method is used.



Participation as presented above (*):


                                                                   Income from   Current
                                                                   Marketable     Period
                                          Total Fixed              Securities    Profit /
                                             Assets                 Portfolio      Loss
                           Shareholders'                Interest                           Prior Period   Fair
                                                         Income                              Profit /    Value
                 Total        Equity                                                           Loss
                Assets
                28,354         4,866          466         211           -        (2,945)       582         -



(*) The financial statements of TEB Sigorta A.S. is prepared in accordance with
the principles of  Insurance Law and the current year data is stated as of June
30, 2003 and the previous period data is stated as of December 31, 2002.



b.6)     Information on consolidated investments which are sold in current
period : None.



b.7)     Consolidated investments purchased in the current period: None.


7.         Information on Subsidiaries (Net):



a)     Information on unconsolidated subsidiaries:



TEB Kiymetli Madenler Anonim Sirketi is not included in the consolidation in
accordance with AAR's materiality principle.



a.1)      Information on unconsolidated subsidiaries:


                                                                  Bank's share       Group's risk group
                                                             percentage-If different  share percentage
                                                              voting percentage(%)           (%)

            Description              Address(City/ Country)

     TEB Kiymetli Madenler A.S.          Istanbul/Turkey              66.00                 71.81



a.2)      Information on subsidiaries as presented in table a.1 (*):


                                                            Income from
                                                            Marketable
                                                            Securities     Current
                                                             Portfolio      Period
             Shareholders'Equity  Total Fixed   Interest                   Profit /    Prior Period     Fair
                                     Assets      Income                      Loss      Profit / Loss    Value
   Total
  Assets

                           231               -           -             -      (40)              40          -
     237                                                                      



(*) The amounts at the fianancial statements are presented with their nominal
values as of June 30, 2003.



b)    Information on the consolidated subsidiaries.



b.1)     Information on the consolidated subsidiaries:


                                                                                                       
                                                                         Current Period   Prior Period 
                Balance at the beginning of the period                           124,322        110,603
                Movements during the period                                        3,157         13,719
                Purchases                                                              -          7,665
                Free shares obtained profit from current year's share             10,971          5,038
                Dividends from current year income                              -                     -
                Sales                                                                  -              -
                Revaluation increase (*)                                         (7,814)          1,016
                Provision for impairment                                               -              -
                Balance at the end of the period                                127,479        124,322 
                Capital commitments                                                  -               - 
                Share percentage at the end of the period (%)        
                                  
(*)    The foreign exchange (expense)/income generated from the difference
between the devaluation and inflation of the foreign subsidiaries.


b.2)     Valuation of investments made to the consolidated subsidiaries:

Subsidiaries denominated in Turkish Lira are reflected by restating their costs
with the conversion factors applicable for the relevant dates after deducting
the capital increases generated by funds like the revaluation fund. When there
is a permanent diminution in value of the subsidiaries then a provision is set.
Subsidiaries denominated in foreign currency are translated into Turkish Lira by
applying the exchange rates prevailing at balance sheet dates.


                                                                                      
                                                              Current Period   Prior Period
                             Valuation with cost                     127,479        124,322
                             Valuation with fair value                     -              -
                             Valuation with equity method                  -              -

b.3)     Sectoral information on consolidated subsidiaries and the related
carrying  amounts:

                                                                                   Current      Prior Period
                                                                                    Period
Banks                           /         The Economy Bank N.V.                     48,285            47,904
Other Financial Sub.    /         Petek International Holdings B.V.                    724               863
    TEB Yatirim Men.Deg. A.S.                                                       29,851            26,936
                                               TEB Portfoy Yonetimi A.S.             3,224             3,224
Leasing Companies     /         TEB Finansal Kiralama A.S.                          27,951            27,951
Factoring Companies  /          TEB Factoring A.S.                                  17,444            17,444
                                                                                   127,479           124,322
Total



b.4)     Consolidated subsidiaries which are quoted to a stock exchange: None.



b.5)     Information related to subsidiaries that are included in consolidation:


                                                         Bank's share      Group's risk
                                                         percentage-If      group share
                                    Address (City /    different voting     percentage      Method of
                                       Country))         percentage(%)          (%)       Consolidation
           Description

The Economy Bank N.V.              Netherlands                      100.00             -       Full
Petek International  Holdings B.V. Netherlands                      100.00             -       Full
TEB Yatirim Menkul Degerler A.S.   Istanbul/Turkey                   74.80         25.20       Full
TEB Portfoy Yonetimi A.S.          Istanbul/Turkey                   55.89         44.11       Full
TEB Finansal Kiralama A.S.         Istanbul/Turkey                   68.76         31.24       Full
TEB Factoring A.S.                 Istanbul/Turkey                   65.80         34.20       Full



Information on subsidiaries as presented in table 10. b.5:
                                                                                                                      
                                                                 Income from       Current                            
                                    Total                       Marketable          Period                            
    Total       Shareholders'       Fixed        Interest       Securities       Profit / Loss      Prior      Fair   
  Assets (*)      Equity (*)      Assets (*)    Income (*)     Portfolio (*)          (*)           Period     Value  
                                                                                                   Profit /           
                                                                                                  Loss (*)            
   1,058,720            74,250         1,407        26,505               (571)            239         8,112        -  
       1,630             1,630             -             -                  -            (26)         3,262        -  
      16,281            13,983           464           728                  -             156         2,983        -  
       4,843             4,305           602           432                 76             617           876        -  
     185,328            61,569       159,531           642                  -          29,987         4,141        -  
      85,621             7,951           178         6,608                  -           1,274           500        -  

(*)       Information is disclosed in statutory amounts.


b.6)     Information on the consolidated subsidiaries that were disposed  in
current period: None.


b.7)     Information on the consolidated subsidiaries purchased in current
period: None.


8.         Information on financial lease receivables (Net):


a)     Aging of leasing receivables:


                                                 Current Period                Prior Period
                                                   Gross           Net          Gross           Net
Less than 1 year                                  80,528        70,198         70,890        61,960
Between 1-4 years                                 45,912        42,134         32,897        30,920
Over 4 years                                         669           608          4,269         1,925

Total                                            127,109       112,940        108,056        94,805



9.         Information on receivables arising from term sales of assets included
in miscellaneous receivables: None.



10.      Explanations related to interest and income accruals:



a)     Information about accrued interest and income receivables of loans:


                                                       Current Period            Prior Period
Accrued interest and income receivables                     TL           FC          TL         FC
Interest accruals - due                                    242            1         254          -
Interest accruals - not due                              8,316        8,229      10,165     10,943
Loan commissions and other income accruals - due             -            -           -          -
Loan commissions and other income accruals - not            17            5          12          1
due
Total                                                    8,575        8,235      10,431     10,944



b)    Information on other interest and income accruals:


                                                       Current Period          Prior Period
Other interest and income accruals                  TL          FC        TL          FC
Trading securities                                        5,865        99       3,874         125
Securities available for sale                                 -       515           -         399
Securities held to maturity                                 780        75         815          75
Interest accruals of reverse repo transactions                6         -           -           -
Interest accruals of reserve deposits                     1,163       175       1,026         276
Income accruals of financial derivative instruments       3,936       167       4,164         351
Interest and income accruals                                  4        12           -           -
Income accrual of foreign exchange gains                  3,932       155       4,164         351
Income accruals of financial lease income                   107       455         147         669
Other                                                     8,226       292       6,378         594
Total                                               20,083      1,778     16,404      2,489




11.      Information on other assets:



a)     Information on prepaid expenses, taxes and similar items:


                                                                       Current Period      Prior Period
Deferred tax                                                                      9,150              2,277
Advances given                                                                       82                206
Prepaid rent expenses                                                               405                459
Transaction cost related to financial liabilities                                   812              2,291
Prepaid taxes                                                                     5,518             12,031
Financial lease agreements in progress                                            5,663              1,558
Leasing premium receivable                                                       16,350             14,790
Other                                                                            16,456             10,399
Total                                                                            54,436             44,011



b)    Other assets and liabilities which exceed 10 % of the balance sheet total
(excluding off-balance sheet commitments) and breakdown of these which
constitute at least 20% of grand total: None.





II-     Footnotes and Explanations Related to the Consolidated Liabilities



1. a)     Information on maturity structure of deposits:



a.1)      Current period :


                            Demand 7 day Call      Up to 1 1-3 Month 3-6 Month 6 Month-1   1 Year and
                                     Accounts        month                          Year         over
Saving deposits             38,708     30,855       68,804    75,042    45,474    42,108       32,104
Foreign currency           360,521          -      436,261   281,985    25,980     7,365          373
deposits
Residents in Turkey        343,323          -      426,501   277,533    25,304     6,177          357
Residents abroad            17,198          -        9,760     4,452       676     1,188           16
Public sector deposits      10,863          -            -         -         -         -            -
Commercial deposits        107,531    541,432      101,041    38,451    28,749    77,732       38,784
Other institutions          38,938          -        5,458       307        11         1            -
deposits
Precious metals deposits     4,000          -            -     4,688         -       637            -
Interbank deposits           8,528          -       35,099    42,565     1,200         -            -
Central Bank of Turkey           -          -            -         -         -         -            -
Domestic Banks                 278          -        5,742         -         -         -            -
Foreign Banks                3,749          -       29,357    42,565     1,200         -            -
Special finance houses       4,501          -            -         -         -         -            -
Other                            -          -            -         -         -         -            -
Total                      569,089    572,287      646,663   443,038   101,414   127,843       71,261



a.2)      Prior period:


                            Demand 7 day Call      Up to 1 1-3 Month 3-6 Month 6 Month-1   1 Year and
                                     Accounts        month                          Year         over
Saving deposits             19,576          -       87,222    42,901    13,971     3,646       15,014
Foreign currency           510,078          -    1,326,614   395,939    83,255    85,361      182,810
deposits
Residents in Turkey        437,565          -      549,798   341,789    32,943     7,880          376
Residents abroad            72,513          -      776,816    54,150    50,312    77,481      182,434
Public sector deposits          39          -            -         -         -         -            -
Commercial deposits         60,390          -      107,027     4,766     9,484         5           15
Other institutions          36,517          -          478        16         8         1            -
deposits
Precious metals deposits    10,828          -            -    12,627         -     1,576            -
Interbank deposits          22,211          -       77,247    16,967         -     1,115            -
Central Bank of Turkey           -          -            -         -         -         -            -
Domestic Banks              12,293          -            -         -         -     1,115            -
Foreign Banks                9,918          -       77,247                   -         -            -
Special finance houses           -          -            -   16,967-         -         -            -
Other                            -          -            -         -         -         -            -
Total                      659,639          -    1,598,588   473,216   106,718    91,704      197,839



b.1)     Information on saving deposits under the guarantee of saving deposit
insurance and exceeding the limit of saving deposit insurance:


                                                  Under the     Under the    Exceeding
                                                 guarantee of guarantee of  the limit of
                                                    saving       saving                  Exceeding the
                                                   deposit       deposit       saving      limit of
                Saving Deposits                   insurance     insurance     deposit
                                                                                            saving
                                                                                            deposit
                                                      Current  Prior Period      Current  Prior Period
                                                       Period                     Period
Saving deposits                                        70,102        27,164      262,993       155,167
Foreign currency saving deposits                      260,263       214,995      454,612       703,850
Other deposits in the form of saving deposits             513           758        1,216         7,363
Foreign branches' deposits under foreign                    -             -            -             -
authorities' insurance
Off-shore banking regions' deposits under                   
foreign authorities' insurance                              -             -            -             -
Total                                                 330,878      242,917       718,821      866,380




b.2)     The Group which has settled abroad should disclose, the total amount of
savings deposit in Turkey branch, and insured in the country of head office :
None



b.3)     Saving deposits which are not under the guarantee of deposit insurance
fund : None.



2.                         Information on funds provided from repurchase
agreement transactions:



                                               Current Period               Prior Period
                                              TL            FC             TL            FC
From domestic transactions                      21,928             -          24,415           -
Financial institutions and organizations        16,500             -          14,492           -
Other institutions and organizations             1,657             -           4,509           -
Real persons                                     3,771             -           5,414           -
From foreign transactions                            2             -           1,001           -
Financial institutions and organizations             -             -               -           -
Other institutions and organizations                 -             -           1,000           -
Real persons                                         2             -               1           -
Total                                           21,930             -          25,416           -



3. a)     Information on funds borrowed:


                                                     Current Period            Prior Period
                                                     TL           FC          TL          FC

Short-term                                             40,698     341,217      39,385     300,687
Medium and long-term                                        -      73,665           -      97,888

Total                                                  40,698     414,882      39,385     398,575





4. a)     Information on debt securities issued: None.



b)    The explanation on the maturity structure, interest rate, type of currency
of the issued marketable securities : None.



5.         Explanation on funds: None



6.         Explanation on miscellaneous payables:


                                                               Current Period     Prior Period
Total amount of cash collateral obtained                            104                134



The table consists of blocked accounts regarding cash collateral, loans, import
and export transactions.



7.      Other assets and liabilities which exceed 10 % of the balance sheet
total (excluding off-balance sheet commitments) and breakdown of these which
constitute at least 20% of grand total: None



8.         Explanations on liabilities generated from financial lease payables:
None




9.         Information on interest and expense accruals:


                                                     Current Period             Prior Period
                                                    TL           FC          TL           FC
Accrued interest on deposits                          7,973         6,116     5,908           9,842
Accrued interest on funds borrowed                    2,288         1,807     2,297           2,436
Accrued interest on bonds                                 -             -         -               -
Accrued interest on repurchase agreement                 23             -        31               -
transactions
Accrued interest on derivative financial             15,850             -     5,206               -
instruments
Accrued interest and expense                              -             -         -               -
Foreign exchange losses accrued                      15,850             -     5,206               -
Other interest and expense accruals                   8,683         1,064     1,119             917
Total                                                34,817         8,987    14,561          13,195



10.      Provisions and subordinated loans:



a)     Information on general provisions:


                                                                        Current Period     Prior Period
General provisions                                                                 6,753             6,792
Provisions for First Group Loans and Receivables                                   5,711             5,762
Provisions for Second Group Loans and Receivables                                     21                35
Provisions for Non Cash Loans                                                      1,021               995
Others                                                                                 -                 -
Total                                                                              6,753             6,792



b)    Information on employee termination benefits and notice indemnity:


                                         5 PPR     4 PPR        3 PPR     2P PR     Prior PR Current PR

Actual Payments of Employee                 56       107          947       662          435          -
Termination Benefits (**)
Reserve for Employee Termination         1,580     3,140        4,456     6,912       10,972     14,350
Benefits and  Notice Indemnity (**)
Actual Payment Ratio                     3.57%     3.40%       21.24%     9.59%        3.96%          -
Ratio of reserve for Employee                                                                     8.35%
Termination Benefits and  Notice
Indemnity (*)
Possible reserve for Employee                                                                     1,896
Termination   Benefits and Notice
Indemnity



(*) 5-year actual payment rate.

(**) The liability and payment amounts regarding the prior periods are stated at
historical cost.,



As of June 30, 2003, TL 912 of reserve for employee termination benefits and
notice indemnity was reflected to the financial statements of Parent Bank
corresponding to 8.35% of total liability of TL 14,350.



The consolidated subsidiaries have calculated reserve for employee termination
benefits and notice indemnity in accordance with the regulations they apply, and
reflected an amount of TL 984 into their financial statements as of June 30,
2003.



c)       Information on free reserves for possible losses : None.



d)    Information on subordinated loans:


                                              Current Period                Prior Period
                                              TL             FC           TL            FC
From Domestic Banks                                   -            -             -             -
From Other Domestic Institutions                      -            -             -             -
From Foreign Banks                                    -            -             -             -
From Other Foreign Institutions                       -       21,115             -        27,418
Total                                                 -       21,115             -        27,418



11.          Information of Shareholders' Equity:



a)     Presentation of paid-in capital:


                                                                        Current Period     Prior Period
Common stock                                                                      55,125            55,125
Preferred stock                                                                        -                 -



b)    Paid-in capital amount, explanation as to whether the registered share
capital system is applicable to the  Group if so, amount of registered share
capital ceiling:


                Capital System                        Paid-in capital                  Ceiling
 Registered capital system                              55,125                         100,000



c)     Information on share capital increases and their sources; other
information on increased capital shares in current period: None.



d)    Information on share capital increases from revaluation funds: None.



e)     Capital commitments in the last fiscal year and at the end of the
following interim period, the general purpose of these commitments and projected
resources required to meet these commitments : None.



f)     Indicators of the Group's income, profit and liquidity for the previous
periods and within these indicators possible affects on capital  fore sighting
uncertainty : None.



g)    Information on privileged shares:



       7 % of the Parent Bank's remaining net income and tax after deducting
legal reserves and first dividends, corresponding to the Group's 60,000 shares
of TL 30,000,000 (in full TL) is distributed to the founder shares.



12. a)  Common stock issue premiums, shares and equity instruments: None.



13.      Information on shareholders having more than 10 % share:


  Name/Commercial title        Amounts       Share Percentage  Paid-in capital    Unpaid portion
TEB Mali Yatirimlar A.S.             38,631             70.08%           38,631                  -




III.       Footnotes and Explanations Related to the Consolidated Income
Statement



There is no fundamental error for any groups or items related to the prior
period. There is no change in  accounting estimates for the fiscal year.



The breakdown of other interest and non-interest income and expense accounts
total to 20% of the items that exceed 10% of the related totals are shown below.



Other interest income amounting to TL 20,840 includes financial lease interest
income amounting to TL 13,595 and factoring interest income amounting to TL
6,693.



The total other interest expense amounting to TL 20,986 consists of foreign
exchange losses amounting to TL 11,039 of foreign currency indexed loans
occurred from the devaluation of foreign currencies against TL and interest
expenses on marketable securities subject to repurchase agreements amounting to
TL 9,891



The total other fees and commissions received amounting to TL 17,245 majorly
consists of credit card fees and commissions amounting to TL 3,482 and brokerage
commissons amounting to TL 4,245. Other fees and commission expense totaling to
TL 7,112 majorly consists of fees and commissons given to credit card
tarnsactions totaling to TL 3,405, and fees and commissons paid for the
transactions generated from the interbank money market totalling to TL 817.



1. a)     Information on interest income received from investments and
subsidiaries: None.



    b)    Information on financial lease income : None.



    c)     Interest received from reverse repurchase agreement transactions:
None


                                                  Current Period             Prior Period
                                                 TL            FC           TL          FC
Interest received from reverse repurchase           1,176             -       3,021           -
agreement transactions



2. a)     Information on interest expense to investments and subsidiaries:
None.



    b)    Information on financial lease expenses : None.



c)     Distribution of interest expense on deposits based on maturity of
deposits :


                                                           Time Deposits
                               Demand    Up to 1    Up to 3    Up to 6    Up to 1 More than 1
                             Deposits      Month     Months     Months       Year        Year
       Account name                                                                                 Total
TL
Bankdeposits                        2      5,735          -          -          -           -       5,737
Saving deposits                   334     14,311     12,361      4,847      1,012       2,997      35,862
Public sector deposits              -          -          -          -          -           -           -
Commercial deposits             1,034     12,611      3,126        466         27           3      17,267
Other deposits                     12        157         24          2          -           -         195
7 days call accounts                -          -          -          -          -           -           -
Total                           1,382     32,814     15,511      5,315      1,039       3,000      59,061
FC
Foreign currency deposits         777      8,837      6,115      1,063        624       8,107      25,523
(*)
7 days call accounts               11         82         13          -          -           -         106
Precious metal deposits             -          8         62          -         11           -          81
Total                             788      8,927      6,190      1,063        635       8,107      25,710
Total                           2,170     41,741     21,701      6,378      1,674      11,107      84,771

(*) Interest expense on foreign currency demand deposits includes TL 585 of
foreign Bank deposits  interest expense.


d)            Interest expense on repurchase agreements:


                                                     Current Period           Prior Period
                                                     TL          FC         TL          FC
Interest expense on repurchase agreements              9,891 -           19,997    -



3.         Net income/losses from marketable securities for investment purposes:
None



4.         Information on other operating income :



The information on the factors affecting the Group's income including
extraordinary items and new developments, and the explanation on nature and
amount of income earned from extraordinary items : None.



5.         Provision expenses of the Group for loans and other receivables:


                                                                 Current Period     Prior Period
Specific provisions for loans and other receivables                          609              6,052
Unsecured                                                                      -              5,152
Other groups                                                                 609                900
General provision expenses                                                 1,679              2,176
Marketable securities impairment expense                                      29              1,469
Provision for impairment*                                                    180                  -
Other                                                                        562                114
Total                                                                      3,059              9,811



(*)       Provision for impairment related to participations, subsidiaries and
securities held to  maturity



6.a)     Income and expenses relating to investments and subsidiaries: None



b)    The income or expense share resulting from the investments at the
participations at The information on income  and expense from related party
transactions: None.



c)       The information on income  and expense from related party transactions:




The Parent Bank and the Economy Bank NV, a subsidiary of the Bank, have certain
banking transactions with the group companies. These are commercial
transactions, which are realized in line with market rates. These are reflected
in income statement. The related amounts are presented in Part VI.



7.         The explanations on net income / loss for the period:



a)     Income/loss related to minority shares:


                                                                    Current Period   Prior Period
Income and loss related to minority shares                          (910)           1,372



8.         Nature and amount of changes in accounting estimates, which have a
material effects on current period or expected to have a material effect on
subsequent periods : None.



IV-    Footnotes and Explanations Related to the Consolidated Off-balance Sheet

Commitments



1.a)     Disclosure to be made separately from other contingent liabilities:



a.1)      The Group's share in contingent liabilities of joint ventures together
with other ventures : None.



a.2)      Share of joint ventures in their own contingent liabilities: None.



a.3)      The Group's contingent liabilities resulting obligations of other
ventures in joint ventures : None.



b)    Accounting and presentation of contingent  assets and liabilities in the
financial statements :



b.1)     For contingent assets, if realization probability is close to certain,
then it is accounted. If realization probability is low, then it is explained in
the footnotes. As of June 30, 2003 there are no contingent assets needed to be
explained.



b.2)     For contingent liabilities, if realization probability is close to
certain, then provision is set. If there is low or no realization probability,
then it is explained in the footnotes : None.



2.             Information on off-balance sheet commitments:



a)     Nature and amount of irrevocable loan commitments: As of June 30, 2003
and December 31, 2002, credit card spending limit commitments are TL 93,239 and
TL 75,062, respectively.



b)       Nature and amount of contingent loss and commitments from off-balance
sheet items including below statements:



The Group, within the context of banking activities, undertakes certain
commitments, consisting of loan commitments, letters of guarantee, acceptance
credits and letters of credit.



b.1)     Non-cash loans including guarantees, acceptances, financial collaterals
and other letters of credits:



            As of June 30, 2003 total guarantees and commitments consist of
letter of guarantees amounting to TL 597,314 (December 31, 2002 - TL 647,257),
acceptances amounting to TL 44,625 (December 31, 2002 - TL 44,992),  and letters
of credit amounting to TL 369,183 (December 31, 2002 - TL 358,932).



b.2)     Guarantees, surety ships and similar transactions : The Group has other
commitments and contingencies amounting TL 8,062 (December 31, 2002 - TL 10,107)
other than the ones explained in article b.1).



3.a)     Non-cash loans:


                                                                    Current Period   Prior Period
Guarantees given against cash loans                                          57,017          66,829
With maturity of 1 year or less than 1 year                                  21,366          25,040
With maturity of more than 1 year                                            35,651          41,789
Other non-cash loans                                                        962,167         994,459
Total                                                                     1,019,184       1,061,288




b)        Collateral, mortgage and other restrictions on tangible fixed assets,
the amount of capital expenditures related to expenses construction of tangible
fixed assets, intangible fixed asset purchase commitments: None.



4.         The information on the Parent Company Bank's rating by in the
international rating introductions:



The results of the work performed for the Parent Company Bank by Moody's
Investor Services and Fitch Ratings are shown below.


Moody's Investor Services: March 2003 

Bank Financial Strength                  D+
Long Term FX Deposits                    B3

Fitch Ratings: March 2003 
 
Foreign Currency Commitments            
Long Term                                B -
View                                     Negative
Turkish Lira Commitments 
Long Term                                B -
View                                     Negative
National 
Long Term                                A (tur)
View                                     Negative
Individual Rating                        C/D
Support Points                           4T



Additionally, Fitch Ratings have made an announcement at July 22, 2003 with
respect to the changes in its rating methodology and stated that the support
points rate for the Bank has been decreased to 5 from 4T.


V-        Footnotes And Explanations Related To Statement Of Cash Flows

1.         Cash and cash equivalents at beginning and end of periods:


The reconciliation of the components of cash and cash equivalents, accounting
policies used to determine these components, the effect of any change made in
accounting principle in the current period, the recorded amounts of the cash and
cash equivalent assets at the balance sheet and the recorded amounts in the cash
flow statement:


                                                      Current Period     Prior Period  
                                                           30.06.2003       30.06.2002 
                                 Cash                          71,600           80,828 
                                 Cash equivalents           1,553,912        1,845,664 


Cash includes of cash in TL and cash in foreign currency, cash equivalents
include the balances of the Central Bank, banks and interbank funds sold which
mature in less than three months.



2.         Amount of cash and cash equivalents restricted for the usage of the
Group and the shareholders by legal limitations and other reasons: None.



VI-       Footnotes and Explanations Related to the Risk Group of the Parent
Bank



1.         Volume of The Bank's risk group transactions, income and expense
amounts involved and outstanding loan and deposit balances:



a)         Current Period:


                                   Investments and      Direct and indirect    Other entities  included
                                                                                          in
     Bank's Risk Group (*)          subsidiaries        shareholders of the
                                                               Group                related parties
                                       Cash  Non-cash        Cash     Non-cash        Cash      Non-cash
Loans and other receivables
Balance at beginning of period            -         -     112,564        7,502      11,319         4,875
Balance at end of period                  -         -      62,662        1,193       2,206         4,907
Interest and commission income            -         -         380            4       1,703            30



b)        Prior Period:


                                   Investments and      Direct and indirect    Other entities  included
                                                                                          in
     Bank's Risk Group (*)          subsidiaries        shareholders of the
                                                               Group                related parties
                                       Cash  Non-cash        Cash     Non-cash        Cash      Non-cash
Loans and other receivables
Balance at beginning of period            -         -      23,972        1,335     120,254         6,397
Balance at end of period                  -         -     112,564        7,502      11,319         4,875
Interest and commission income            -         -       4,842          510      11,667           610



c.1)      Information on Bank's Risk Group deposits balances:


                                   Investments and      Direct and indirect    Other entities  included
                                                                                          in
     Bank's Risk Group (*)          subsidiaries        shareholders of the
                                                               Group                related parties
Deposits                            Current     Prior      Current       Prior     Current         Prior
                                     period                 period
                                               period                   period      period        period
Balance at beginning of period            -         -      208,497      66,206     861,619       362,901
Balance at end of period                  -         -      165,592     208,497     610,157       861,619
Interest on deposits                      -         -        2,590       3,408       6,503        49,775



c.2)      Information on forward and option agreements and other similar
agreements made with related parties:


           Bank's Risk Group      Investments and         Direct and indirect        Other entities
(*)                                 subsidiaries       shareholders of the Group  included in related
                                                                                        parties
                                 Current         Prior     Current         Prior     Current      Prior
                                  period          period      period        period      period     period
Trading transactions
Beginning of period                    -             -      48,281        25,826      27,295     17,475
End of period                          -             -      13,222        48,281      24,052     27,295
Total income/loss                      -             -     (2,091)         (384)          26        689
Hedging transactions purposes
Beginning of period                    -             -           -             -           -          -
End of period                          -             -           -             -           -          -
Total income/loss                      -             -     (2,091)         (384)          26        689



(*)       The scope of the related parties are defined in the Article 20-2 of
the "Regulation on the Establishment and Operations of Banks".






2.         Disclosures for related parties



a)     The relations of the Group with the entities controlled by the Group and
its related parties, regardless of whether there are any transactions or not:



The Parent Bank enters into banking transactions with group companies in
accordance with the Banking Law. These are commercial transactions and realized
on an arms-length basis.



b)    Besides the structure of relationship, nature of the transaction, amount
and ratio to the total volume of transactions, amount of major items and ratio
to all items, pricing policies and other factors:


                                                                           % According to the Amounts at
                                                                              the Financial Statements


                                                             Amount
Cash loans                                                          64,868                           4.94
Noncash loans                                                        6,100                           0.60
Deposits                                                           775,749                          30.64
Forward transactions and option agreements                          37,274                           5.10



These transactions are priced in accordance with the general pricing policies of
the Bank and are in line with market rates.



c)     In the case that disclosing items separately, total of  similar items is
disclosed in order to present the total impact on financial statements :
Explained in the article b.



d)    Investments accounted for under the equity method : None.



e)       Disclosures related to purchase and sale of real estate and other
assets, trading of services, agency contracts, leasing contracts, transferring
information as a result of research and development, license contracts,
financing (loans and cash or real capital supports included), guarantees, and
management contracts :



The Group has financial lease agreements with TEB Finansal Kiralama A.S. The
total leasing obligations related to these agreements amounted to TL 6,058.
Additionally, the Group provides agency services for TEB Sigorta A.S. and TEB
Yatirim Menkul Degerler A.S.



        Within the limits of the Banking Law, the Group renders cash and
non-cash loans to its related parties and the ratio of these to the Group's
total cash and non-cash loan portfolio is 3.04 %. Amounts of these loans are
explained in the note 1a.



As of June 30, 2003 the Group has no purchases and sale of real estate and other
assets, transfer of  information as a result of research and development,
license and management contracts with the related parties.



VII-     Footnotes and Explanations Related to Inflation Accounting



Inflation Accounting



The accompanying financial statements are prepared by applying inflation
accounting to the financial statements, which are prepared on a historical cost
basis, except for the revaluation of fixed assets in line with Turkish Tax
Legislation, in accordance with the provisions of Communique No : 14 "Accounting
Standard Related to the Preparation of Financial Statements in Hyperinflationary
Periods" related to ARR. Communique No:14 requires Banks to restate their
consolidated financials in the equivalent purchasing power of Turkish Lira at
the balance sheet date. One characteristic that necessitates the application of
inflation accounting under the provisions of Communique No : 14 is a cumulative
three-year inflation rate approaching or exceeding 100%. As of June 30, 2003
based on the wholesale price indices announced by the State Institute of
Statistics, the cumulative three-year inflation rate in Turkey is 208%.



Communique No:14 requires that the financial statements should be restated in
the equivalent purchasing power at the balance sheet date and the financial
statements of prior year should be restated in their entirety to the measuring
unit current at the balance sheet date.



The main guidelines for inflation accounting are as follows:



Cash and monetary assets and liabilities, which maintain their nominal balances
but experience a decline in purchasing power are not restated because they are
already expressed in terms of the monetary unit current at that balance sheet
date.



Non-monetary assets and liabilities which are not carried at amounts current at
the balance sheet date and other components of shareholders' equity (except for
the revaluation surplus which is eliminated) are restated by applying the
relevant conversion factors; being the change in the general price index from
the date of acquisition to the closing date. The inflation adjusted share
capital amount has been derived by indexing each capital increase other than
bonus shares from statutory revaluation fund from the date they were
contributed. Transfers to share capital from general reserves, gain on sale of
property and investments and inappropriate profits are considered as cash
contributions and are restated from the date of contribution.



Fixed assets subject to depreciation are restated from their historical
acquisition costs after eliminating the statutory revaluation increments.
Depreciation is not separately restated in the income statement since it is
computed over restated amounts.



Non-monetary items reflected at current values are not restated since they are
already stated in the current purchasing power.



Investments and subsidiaries denominated in Turkish Lira are reflected at
restated costs by converting historical acquisition costs, excluding free shares
from revaluation fund, with the relevant conversion factors. Transfers to share
capital from general reserves, gain on sale of property and investments and
inappropriate profits are considered as cash contributions and are restated from
the date of contribution. Investments and subsidiaries denominated in foreign
currency are converted to Turkish Lira with the exchange rates prevailing and
year-end.



All items in the statements of income are restated by applying the appropriate
conversion factors.



The effect of inflation on the Group's net monetary position is included in the
statements of income and separately disclosed as a net monetary gain or loss.
The effect of inflation accounting on prior year financial statements in
included in retained earnings and the effect of restatement is disclosed
separately under shareholders' equity.


Indices and conversion factors that are used to restate the accompanying the
financial statements as of June 30, 2003, reflecting the restatement for the
changes in the general purchasing power of the Turkish is as follows:


                                                                                  Conversion Factors

                                                                       Index
June 30, 2003                                                             7,222.2              1.000
June 30, 2002                                                             5,572.0              1.296
December 31, 2002                                                         6,478.8              1.115
December 31, 2001                                                         4,951.7              1.459
December 31, 2000                                                         2,626.0              2.750



Restatement of balance sheet and income statement items through the use of a
general price index and relevant conversion factors does not necessarily mean
that the Group could realize or settle the same values of assets and liabilities
as indicated in the balance sheets. Similarly, it does not necessarily mean that
the Group could return or settle the same values of equity to its shareholders.



Explanations regarding the economical life of assets subject to depreciation,
depreciation calculation made in accordance with the regulations and indexed
amounts, and whether expertise values are used to determine the fair values of
these assets:



In accordance with Communique No :14, the Parent Company Bank obtains expertise
reports for its buildings.



As of June 30, 2003 the total amount of legal reserves and general reserves are
TL 7,555 and TL 28,769, respectively, in the Bank's  statutory books of account.



Balance sheet and income statement for the interim period ended June 30, 2003
are reviewed.  Balance sheet as of December 31, 2002, is audited. Income
statement for the interim period ended June 30, 2002 is audited by another audit
firm which has ceased operations.



Income statement items do not have seasonality. However, restatement of income
statement items were made with monthly indices.




 VIII-   Explanations Related to Subsequent Events



a)     Disclosure related to subsequent events and their impact on the financial
statements as required by the related standard: None.



b)       The impact of significant changes in foreign exchange rates subsequent
to the balance sheet date on the foreign currency transactions, items and on the
consolidated interim financial statements of the Group: There are no significant
changes.





                                  SECTION SIX



                        REPORT OF  INDEPENDENT AUDITORS



I.                   Explanations on the Report of Independent Auditors:



The consolidated interim financial statements of the Group were reviewed by
Guney Serbest Muhasebeci Mali Musavirlik A.S. (An Affiliated Firm of Ernst &
Young International) and the review report of independent auditors, dated August
27, 2003, is presented preceding the consolidated interim financial statements.





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