Financial Institutions

Turkey Credit Analysis Ratings Foreign Currency Long Term IDR Short Term IDR Local Currency Long Term IDR Short Term IDR Current Ratings BB B BBB F3 National Long term AAA(tur) Support Rating 3 Sovereign Risk Foreign Long Term IDR Local Long Term IDR Country Ceiling Outlook BB BB BB Foreign Long Term IDR Stable Local Long Term IDR Stable National Long Term Stable Sovereign Foreign Long Term IDR Stable Sovereign Local Long Term IDR Stable Financial Data 30 June 07 31 Dec 06 Total Assets (USDm) 482.3 477.8 Total Assets (TRYm) 635.4 673.2 Total Equity (TRYm) 31.4 28.8 Operating Profit 3,318 5,958 (TRY000) Published Net 2,634 4,593 Income (TRY000) Operating ROAA (%) 1.01 1.16 Operating ROAE (%) 22.03 22.47 Equity/Total Assets 4.95 4.28 Analysts Turda Ozmen +90 212 279 1065 turda.ozmen@fitchratings.com James Longsdon +44 20 7417 4309 james.longsdon@fitchratings.com Rating Rationale The ratings of are driven by the support of its majority shareholder Turkiye Garanti Bankasi A.S. (Garanti Bank) ( BB /Stable Outlook) and reflect the company s strong operational integration with its parent. belongs to a group of financial services businesses operating under the Garanti brand name. The company uses Garanti Bank s branches for sales and marketing, also benefiting from centralised operations and services provided at the group level. The company s strong expansion over the past two years has outgrown the market, allowed its overall market share to reach 12.4% at end H107 (H106: 8.9%), remaining Turkey s second largest factoring company by factoring volume. H107 net income of TRY2.6m (H106: TRY2.4m) reflected the performance of the core factoring business in contrast to the previous periods which were heavily influenced by incremental interest income earned on cash deposits via interest arbitrage opportunities. Because of a highly leveraged balance sheet (see below), the company s operating ROAE was respectable, at 22% in H107, when the inflation rate was c.8%. Operating ROAA is more modest, however, at 1%. Due to the stringent credit risk management practices, impaired factoring receivables stood at just 0.14% of gross factoring receivables (2006: 0.19%), which were 100% covered by reserves. The company s funding base is undiversified as it relies on bank borrowings for funding and more recently in H107 has added a syndicated loan to its funding sources. Related party funding from Garanti group banks stood at 15% of the total as at end H107. The company is looking into new funding solutions, both to help liquidity management and to cut its cost of funding. Leverage increased sharply over the past two/three years as a result of strong balance sheet growth. Equity stood at 4.9% of assets at end H107 and, with 92% of the company s assets invested in factoring receivables, leverage is very high. Support Were it to run into difficulties, s source of support would be its parent. Fitch Ratings believes Garanti Bank would be willing to provide support, but its ability to do so is moderate, given its BB Foreign Currency IDR. Key Rating Drivers Although small, is an integral part of Garanti Bank. Any changes to Garanti Bank s ratings will drive any upgrades and downgrades. Profile is 55.4% owned by Garanti Bank and 34.8% publicly traded. The remaining 9.8% is held by Turk Eximbank. Garanti Bank is controlled by an equal partnership between Dogus Group and General Electric Consumer Finance (GECF), the international consumer finance arm of General Electric Company. Garanti Factoring uses Garanti Bank s branch network to generate business and serve clients across a wide geographic area. In 2006, 80% of its business was generated through this network. www.fitchratings.com 17

Majority owned by Garanti Bank Implemented a high growth strategy gaining significant market share Profile, one of Turkey s leading factoring companies, was established in 1990 as Aktif Finans Factoring Hizmetleri A.S., a joint venture among a group of Turkish public and private banks including Garanti Bank. An initial public offering (IPO) in 1993 was followed by a second share issue in 1994. In 1996, Dogus Group became the company s majority shareholder, a role that was assumed by Garanti Bank in 2001. In 2002, the company was renamed. Dogus Group, which is controlled by Ferit Sahenk, is a Turkish industrial and financial conglomerate with consolidated end H107 assets of USD15.7bn and equity of USD3.3bn (Please provide). Its main interests are in finance, construction, the automotive sector, tourism, media and telecommunications. The group s financial services companies, which operate under the Garanti brand name, generated approximately 78% (Please provide) of turnover in 2006. Shareholding Structure (%) End H107 Garanti bank 55.40 Public shares 34.82 Turk Eximbank 9.78 Source: Garanti Bank was Turkey s fourth largest bank and its third largest privately owned commercial bank at end Q307. The bank focuses on retail, corporate and commercial banking through 541 as of end Q307 domestic branches and several overseas offices and subsidiaries. It has 10 financial services subsidiaries. Since December 2005, the bank has been owned by a strategic equal partnership by Dogus Group and GECF, the international consumer finance arm of General Electric Company. GECF is a global finance company that provides financial services to consumers and retailers around the world. GECF has equal representation on Garanti Bank s board of directors and has one representative on the board of. Factoring services were first offered in Turkey in 1988 to support export activities. Factoring companies provide receivables collection, guarantee and cash management services. At end Q107, 81 (Q106: 90) factoring companies were operating in Turkey. Factoring penetration measured as factoring volume as a proportion of GDP is around 5% in Turkey lower than Western European markets. Total factoring volume has seen strong growth in the last five years, with a CAGR of 32% in parallel with strong growth in the national economy. At end H107, Garanti Factoring s market share of total factoring volume was 12.4% (end 2006: 12%, H106: 8.9%), making it the second largest player in Turkey. In 2006, domestic factoring business accounted for 85% of total factoring activity in Turkey. At end H107, 90% of s business volume corresponded to domestic factoring, which is carried out on a with recourse basis. Factoring companies in Turkey are regulated by the Banking Regulation and Supervision Agency (BRSA) under the Financial Services Act. In Q406 the BRSA issued a decree governing the activities of factoring companies, along with other non bank financial institutions (NBFIs) leasing and consumer finance companies governing issues such as start up minimum capital requirements, leverage ratios, the opening of representative offices and eligibility criteria for senior management. Work is underway to issue a law for NBFIs. uses Garanti Bank s branch network to generate business and serve clients across a wide geographic area. In 2006, 80% of its business was generated through this network. The company benefits from other group resources such as centralised IT and operations, human resources and training. It also has an 2

internally developed IT infrastructure, facilitating 24 hour client response. Following the reorganisation and change of senior management in 2005, there has been increased emphasis on credit assessment and risk management. The company has also expanded its direct sales team in order to strengthen SME focused marketing activities. Strategy The growth strategy launched in 2005 and pursued into 2006 led to a strong increase in factoring receivables and market share over this period. Garanti Factoring s pace of growth has slowed in H107 due to the base effect from the previous periods. The company s business is mainly geared towards domestic factoring, and management focuses on the SME sector, which has strong growth potential. will work to maintain a diversified portfolio by gaining new clients through the use of the Garanti Bank network and its own marketing efforts. Presentation of Accounts Fitch s analysis is based on s audited accounts, prepared in accordance with IFRS. The application of inflation accounting has been ceased as of 1 January 2006. H107 earnings reflect purely the performance of the factoring book Needs to increase business volume to offset margin pressure Earnings boosted by net recoveries Performance In H107, s factoring assets grew by just over 13% on the end 2006 level, which in itself had seen factoring receivables almost double. The company expanded its asset base significantly over 2005 2006, but this included borrowings that were merely placed back on the interbank market to take advantage of high returns at the time, before they were channelled into core factoring business. Starting from 2007, supported by its increased marketing and sales capability, the company shifted its focus back on its core business. Therefore, the performance indicators in the attached spreads for H107 reflect the performance of the core factoring book to a large extent while the results for 2006 are heavily affected by non core interest income. The company almost tripled its business volume yoy in 2006 and forecasts a yearly 30% increase in 2007. Table 1: Interest Revenue Distribution (%) H107 2006 H106 2005 Interest on factoring 94 68 58 88 Interest on bank deposits 6 32 42 12 (TRYm) Factoring receivables 582.4 514.2 371.1 269.1 Interest earning deposits 3.8 121.3 74.8 80.1 Borrowings 408.7 509.6 369.7 279.4 Source: Fitch on company data Revenues Interest income on factoring grew strongly in H107, supported by higher volumes. Despite lower yields, factoring margins were maintained at 2006 levels. Going forward, margin pressure in the market is expected in the light of declining interest rates and rising competition. In response to that, the company is increasing its number of transactions and yearly business volume. In doing so, the emphasis is placed on smaller sized transactions with higher margins. Table 2 displays the trend in the net factoring margin over the last three six month periods. Apart from the volatility in interest rates at mid year 2006, margins have also been affected from a sharp increase of factoring receivables over this period and the volatility in the amount of the funds borrowed. 3

Net fees and commissions recorded a 46% increase yoy as of H107 supported by the higher number of transactions. Net fees and commissions covered 56% of operating expenses in H107; the company aims to reach a 75% coverage ratio in this area by end 2008. Table 2: Factoring Margins (%) H107 2006 H106 Factoring margin a 2.89 2.88 3.39 Average yield on factoring 8.86 10.17 9.94 Cost of funds 7.45 10.11 5.87 a Interest income on factoring net of adjusted interest expense for factoring over average factoring receivables Source: Fitch Non Interest Expenses Operating expenses have been on an increasing trend, in line with the expansion of the company as it moved to improve its competitive position in the Turkish factoring market. Over the past year, headcount increased significantly especially in the marketing and sales areas, enabling the company s growth to outpace that of the market. According to management, the company has reached a scale that should enable it to handle higher business volumes efficiently, as suggested by its overhead ratio of 1.1%. Future improvements in cost/income efficiency will largely depend on the revenue performance as the future cost base is expected to follow a more stable trend. Impairment Costs The company reported recoveries which resulted in a net recovery amount of TRY148,243 after new impairment costs, which was equivalent to 2.1% of preimpairment earnings for H107. The net recovery position is unlikely to be sustainable over the medium to long term. Prospects Despite strong recent growth, there should still remain significant potential for future growth in factoring, given the relatively limited penetration of this product in Turkey and the country s growing manufacturing and trade activities. aims to continue to command leading market shares while achieving a higher number of transactions to boost its earnings capacity, but this may be a challenge, due to strong competition. The company is looking to increase its penetration of the smaller SME market, where margins are higher, and will remain focused on expanding its domestic business. The target ROAE set for 2008 stands at 23% and largely depends on the implementation of current growth plans in higher margin segments. Since its customer base is focused on consumer orientated retail businesses, the company will remain vulnerable to cyclical changes in Turkey s economy. With recourse domestic factoring receivables accounted for 90% of total factoring receivables at end H107 High client concentration Sound asset quality, with 100% reserve coverage Liquidity management dependent on gap and cash flow forecasting Risk Management As a subsidiary of Garanti Bank, uses the risk management model developed for all of the group s financial institutions. Credit Risk monitors the credit data of its potential customers, making use of sources such as its parent, Garanti Bank, and the Central Bank of Turkey (CBT). The CBT database includes information about borrowers payment history with other financial institutions. The company uses an in house developed software program to monitor credit risk, including control of the approval phases and ongoing monitoring of exposure. In terms of sector exposure to the factoring market, the trade services make up the main share within the portfolio, with 25% as of end H107 (2006: 20%) while the rest is determined by the changes in the composition of the portfolio, which tends to be dynamic with automotive 20%, textile 9% and chemicals 7% at the 4

same date. The five largest factoring clients accounted for 40% of the company s net placements (expressed as factoring receivables factoring payables) and the top 20 for 63% (equivalent to 4.9x and 7.8x of equity, respectively, as at H107), which indicates high client concentration in the portfolio because of one relatedparty transaction which alone accounts for 65% of the top five. However, the ultimate risk in domestic factoring rests with the seller, rather than the factoring company. had related party factoring receivables accounting for 25% of its net placements at end H107 to one of its local parent companies, active in the automotive business. Asset Quality s legal department reviews documentation and prepares contracts. The liquid collateral consists of cheques and promissory notes; for each transaction, the face value of the collateral is 20% higher than that of the receivables. According to current Turkish legislation, all domestic factoring is with recourse, allowing to revert the receivable to the client (the seller) when a buyer does not pay. These made up 90% of s business at end H107. In with recourse factoring, the company has the right to start legal proceedings against the buyer and seller in the event of non payment. If unpaid cheques and notes are not replaced and/or if additional collateral is not provided, Garanti Factoring takes immediate legal action and sets aside 100% reserve coverage. Nonperforming loans declined to just 0.14% of gross receivables at end H107 (2006: 0.19%) and were fully reserved. Market Risk uses the same system as Garanti Bank to monitor market risk. At end H107 the company had a securities portfolio worth of TRY23.4m comprising foreign and domestic private corporate bonds held as available for sale and measured at amortised cost, as they do not have an active secondary market 20% of this portfolio is invested in foreign corporate bonds maturing in 2008, with the rest placed in local companies bonds with maturities longer than two years. Garanti Factoring had an on balance sheet foreign exchange short position equivalent to 2.1x of its equity at end H107 due to the foreign currency funding of TRY assets. However, the net position after derivatives (principally with major foreign banks) was square. At end H107 94% of factoring receivables were fixed rate, against 86% of bank borrowings. Management s estimation of the interest rate sensitivity of fixed rate instruments for 100bp multiplied by five, would give a loss equating to 1.6% of equity. Mainly funded by bank borrowings though the maturity of funding started to lengthen through diversification Capitalisation supported by retained earnings but leverage increasing Liquidity Risk Gross factoring receivables climbed to 92% of total assets as of end H107 while new business was financed mainly with liquid assets consisting of cash and bank deposits. Typical of a NBFI, has historically worked with high loan/asset ratios. has a negative liability mismatch, which exposes the company to refinancing risk in the period up to one month. In managing liquidity the company relies on its short term cash flows to match liabilities as was the case in H107 and on its access to overnight markets which left the company with a sizable refinancing requirement in up to one month period. (end H107: TRY200m). In H207, the company changed its funding structure and extended its debt maturity by extending its borrowing up to one year. Fitch believes that Garanti Bank would have a high propensity to provide liquidity support for, should this be needed. Funding and Capital Funding s funding takes the form of unsecured short term bank borrowings from domestic banks and the international subsidiaries of foreign banks. In H107, 5

the company decreased its borrowings as new business was mainly funded by own sources. The company had TRY and FX funding lines with local and foreign banks in different currencies of the following amounts: TRY518.6m, USD133.5m and EUR97.4m. Within these amounts, the company had TRY95m, USD5m and EUR11m in lines from Garanti group banks (i.e. Garanti Bank and Garanti Bank International). Related party funding stood at 15% of the total as at end H107, all via arm s length transactions. In diversifying its sources of funding, the company has used a syndicated loan of EUR27.5m, accounting for 12% of total borrowed funds. In terms of currencies, the breakdown of borrowed funds is as follows: TRY 49%, EUR 33%, and USD 18%. Capital Although equity has been consistently supported by retained earnings and recorded an 18% yoy increase as of H107, it is declining as a percentage of assets (at 4.9% of H107 assets, 2006: 4.3%, 2005: 6.8%) due to strong balance sheet expansion. Factoring companies do not have to maintain a minimum capital ratio. However, regulations limit the net factoring placements/equity ratio to a maximum of 30.0x where s ratio was 12.3x at end H107. 6

Balance Sheet Analysis GARANTI FACTORING 30 Jun 2007 31 Dec 2006 31 Dec 2005 31 Dec 2004 6 M onths Interim 6 Months Interim As % of Average Year End As % of Year End As % of Year End As % of USDm TRYth Assets TRYth TRYth Assets TRYth Assets TRYth Assets Original Original Original Original Original Original Original Original Restated Restated A. LOANS 1. Loans and Advances < 3 months 305.0 401,801.1 63.24 385,504.4 369,207.6 54.84 229,984.7 64.44 96,609.6 83.98 2. Loans and Advances 3 12 months 125.8 165,765.1 26.09 155,392.4 145,019.6 21.54 38,671.9 10.84 12,234.4 10.64 3. Loans and Advances > 1 year 11.3 14,875.8 2.34 n.a. n.a. 445.1 0.12 n.a. 4. Loan Impairment (to deduct from above) n.a. n.a. n.a. n.a. n.a. n.a. 5. Loan Impairment (memo) 0.6 847.6 0.13 921.8 995.9 0.15 914.6 0.26 1,527.1 1.33 6. Less: Loans from the Insurance Business n.a. n.a. n.a. n.a. n.a. n.a. TOTAL A 442.1 582,442.0 91.67 548,334.6 514,227.2 76.38 269,101.7 75.40 108,844.0 94.62 B. OTHER EARNING ASSETS 1. Loans and Advances to Banks 2.9 3,835.3 0.60 62,531.4 121,227.5 18.01 80,065.7 22.43 n.a. 2. Government Securities n.a. n.a. n.a. n.a. n.a. n.a. 3. Trading Assets n.a. n.a. n.a. n.a. n.a. n.a. 4. Derivatives n.a. n.a. n.a. n.a. n.a. n.a. 5. Other Securities and Investments 17.8 23,472.1 3.69 11,736.1 0.0 0.00 0.0 0.00 0.0 0.00 6. Equity Investments 3.3 4,353.0 0.69 4,353.0 4,353.0 0.65 4,353.0 1.22 4,353.0 3.78 7. Insurance n.a. n.a. n.a. n.a. n.a. n.a. TOTAL B 24.0 31,660.4 4.98 78,620.5 125,580.5 18.65 84,418.7 23.65 4,353.0 3.78 C. TOTAL EARNING ASSETS (A+B) 466.1 614,102.4 96.65 626,955.1 639,807.7 95.03 353,520.4 99.06 113,197.0 98.40 D. TANGIBLE FIXED ASSETS 0.6 739.4 0.12 785.6 831.8 0.12 952.6 0.27 462.7 0.40 E. NON EARNING ASSETS 1. Cash and Due from Banks 14.6 19,241.6 3.03 25,235.9 31,230.3 4.64 1,413.0 0.40 576.9 0.50 2. Other 1.0 1,291.0 0.20 1,329.6 1,368.1 0.20 1,000.3 0.28 801.4 0.70 F. TOTAL ASSETS 482.3 635,374.4 100.00 654,306.2 673,237.9 100.00 356,886.3 100.00 115,038.0 100.00 G. DEPOSITS & M ONEY MARKET FUNDING 1. Due to Customers < 1 year n.a. n.a. n.a. n.a. n.a. n.a. 2. Due to Customers > 1 year n.a. n.a. n.a. n.a. n.a. n.a. 3. Due to Customers, no breakdow n n.a. n.a. n.a. n.a. n.a. n.a. 4. Deposits from Banks n.a. n.a. n.a. n.a. n.a. n.a. 5. Other Deposits and Short term Borrow ings 309.2 407,407.9 64.12 448,025.7 488,643.5 72.58 266,710.5 74.73 58,675.1 51.00 TOTAL G 309.2 407,407.9 64.12 448,025.7 488,643.5 72.58 266,710.5 74.73 58,675.1 51.00 H. OTHER LIABILITIES 1. Derivatives n.a. n.a. n.a. n.a. n.a. n.a. 2. Trading Liabilities n.a. n.a. n.a. n.a. n.a. n.a. 3. Fair Value Portion of Debt n.a. n.a. n.a. n.a. n.a. n.a. 4. Insurance n.a. n.a. n.a. n.a. n.a. n.a. TOTAL H n.a. n.a. n.a. n.a. n.a. n.a. I. OTHER FUNDING 1. Long term Borrow ing 1.0 1,305.9 0.21 11,116.3 20,926.7 3.11 12,668.3 3.55 6,882.0 5.98 2. Subordinated Debt n.a. n.a. n.a. n.a. n.a. n.a. 3. Other Funding n.a. n.a. n.a. n.a. n.a. n.a. TOTAL I 1.0 1,305.9 0.21 11,116.3 20,926.7 3.11 12,668.3 3.55 6,882.0 5.98 J. NON INTEREST BEARING 148.2 195,215.7 30.72 165,036.7 134,857.6 20.03 53,290.4 14.93 27,974.6 24.32 K. HYBRID CAPITAL 1. Hybrid capital accounted for as equity n.a. n.a. n.a. n.a. n.a. n.a. 2. Hybrid Capital accounted for as debt n.a. n.a. n.a. n.a. n.a. n.a. L. TOTAL LIABILITIES 458.4 603,929.5 95.05 624,178.7 644,427.8 95.72 332,669.2 93.21 93,531.7 81.31 M. EQUITY 1. Common Equity 23.9 31,444.9 4.95 30,127.5 28,810.1 4.28 24,217.1 6.79 21,506.3 18.69 2. Minority Interest n.a. n.a. n.a. n.a. n.a. n.a. 3. Revaluation Reserves n.a. n.a. n.a. n.a. n.a. n.a. TOTAL M 23.9 31,444.9 4.95 30,127.5 28,810.1 4.28 24,217.1 6.79 21,506.3 18.69 MEMO: CORE CAPITAL 23.9 31,444.9 4.95 30,127.5 28,810.1 4.28 24,217.1 6.79 21,506.3 18.69 MEMO: ELIGIBLE CAPITAL n.a. n.a. n.a. n.a. n.a. n.a. N. TOTAL LIABILITIES & EQUITY 482.3 635,374.4 100.00 654,306.2 673,237.9 100.00 356,886.3 100.00 115,038.0 100.00 Exchange Rate USD1 = TRY 1.3175 USD1 = TRY 1.4090 USD1 = TRY 1.3451 USD1 = TRY 1.3451 7

Income Statement Analysis GARANTI FACTORING 30 Jun 2007 31 Dec 2006 31 Dec 2005 31 Dec 2004 Incom e As % of Income As % of Income As % of Incom e As % of Expenses Total AV Expenses Total AV Expenses Total AV Expenses Total AV TRYth Earning Assts TRYth Earning Assts TRYth Earning Assts TRYth Earning Assts Original Original Original Original Original Original Restated Restated 1. Interest Income 25,563.1 8.15 58,635.7 11.81 19,242.6 8.25 14,923.5 13.09 2. Interest Expense 17,105.8 5.46 39,878.3 8.03 10,129.2 4.34 6,045.7 5.30 3. NET INTEREST REVENUE 8,457.3 2.70 18,757.4 3.78 9,113.4 3.91 8,877.8 7.78 4. Net Fees & Commissions 2,013.4 0.64 2,916.7 0.59 2,259.1 0.97 1,336.8 1.17 5. Net Insurance Revenue n.a. n.a. n.a. n.a. 6. Other Operating Income 3,707.1 1.18 9,636.9 1.94 3,822.9 1.64 5,555.3 4.87 7. Personnel Expenses 2,119.6 0.68 3,216.1 0.65 1,971.6 0.84 1,786.4 1.57 8. Other Operating Expenses 1,473.7 0.47 2,781.0 0.56 1,582.5 0.68 1,917.3 1.68 9. PRE IM PAIRM ENT OPERATING PROFIT 3,170.3 1.01 6,040.1 1.22 3,995.5 1.71 955.6 0.84 10. Loan Impairment Charge 148.2 0.05 81.3 0.02 354.5 0.15 97.5 0.09 11. Other Credit Impairment and Provisions n.a. n.a. n.a. n.a. 12. OPERATING PROFIT 3,318.5 1.06 5,958.8 1.20 4,350.0 1.86 858.1 0.75 13. Other Income and Expenses n.a. n.a. n.a. n.a. 14. PUBLISHED PRE TAX PROFIT 3,318.5 1.06 5,958.8 1.20 4,350.0 1.86 858.1 0.75 15. Taxes 683.7 0.22 1,365.7 0.27 1,639.3 0.70 329.7 0.29 16. Profit/(Loss) from Discontinued Operations n.a. n.a. n.a. n.a. 17. Change in Value of AFS investments n.a. n.a. n.a. n.a. 18. CurrencyTranslation Differences n.a. n.a. n.a. n.a. 19. Other Gains/(Losses) not in Published Net Income n.a. n.a. n.a. n.a. 20. FITCH COMPREHENSIVE INCOM E n.a. n.a. n.a. n.a. 21. Total Gains/(Losses) not in Published Net Income n.a. n.a. n.a. n.a. 22. IFRS Dividends included in Fitch Interest Expense n.a. n.a. n.a. n.a. 23. PUBLISHED NET INCOME 2,634.8 0.84 4,593.1 0.92 2,710.7 1.16 528.4 0.46 8

Ratio Analysis GARANTI FACTORING 30 Jun 2007 31 Dec 2006 31 Dec 2005 31 Dec 2004 6 Months Interim Year End Year End Year End TRYth TRYth TRYth TRYth Original Original Original Restated I. PERFORMANCE 1. Net Interest Margin % 2.70 3.78 3.91 7.78 2. Loan Yield % 8.86 10.15 9.14 13.45 3. Cost of Funds % 7.45 10.11 5.87 10.19 4. Costs/Average Assets % 1.10 1.16 1.51 3.18 5. Costs/Income % 53.13 49.82 47.08 79.49 6. Pre Impairment Operating ROAA % 0.97 1.17 1.69 0.82 7. Operating ROAA % 1.01 1.16 1.84 0.74 8. Pre impairment Operating ROAE % 21.05 22.78 17.48 4.50 9. Operating ROAE % 22.03 22.47 19.03 4.04 II. CAPITAL ADEQUACY 1. Internal Capital Generation % n.a. n.a. n.a. n.a. 2. Core Capital/Total Assets % 4.95 4.28 6.79 18.69 3. Eligible Capital/Regulatory Weighted Risks % n.a. n.a. n.a. n.a. 4. Eligible Capital+Eligible Revaluation Reserves/Regulatory Weighted Risks % n.a. n.a. n.a. n.a. 5. Tier 1 Regulatory Capital Ratio % n.a. n.a. n.a. n.a. 6. Total Regulatory Capital Ratio % n.a. n.a. n.a. n.a. 7. Free Capital/Equity % 83.81 82.00 78.09 77.61 III. LIQUIDITY (year end) 1. Liquid Assets/Deposits & Money Mkt Funding % 4.72 6.39 0.53 0.98 2. Loans/Deposits % n.a. n.a. n.a. n.a. IV. ASSET QUALITY 1. Loan Impairment Charge/Gross Loans (av.) % 0.05 0.02 0.19 0.09 2. Total Credit Impairment/Pre impairment Operating Profit % 4.67 1.35 8.87 10.20 3. Loan Impairment/Gross Impaired Loans % 100.00 100.00 100.00 100.04 4. Individual Loan Impairment/Gross Impaired Loans % n.a. n.a. n.a. n.a. 5. Impaired Loans Gross / Loans Gross % 0.15 0.19 0.34 1.38 6. Impaired Loans Net/Eligible Capital % n.a. n.a. n.a. n.a. 7. Net Charge offs/gross Loans (av.) % n.a. n.a. n.a. n.a. 9

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