Annual Report 2006 - Deutsche Bank...Annual Report 2006 Deutsche Bank A.ﬁ. Global Identity...

Annual Report 2006

Deutsche Bank A.fi.

Global Identity

Deutsche Bank A.fi. is a leading global investment bank with a strong and prof-itable private client franchise.

Our MissionWe compete to be the leading global provider of financial solutions for demandingclients creating exceptional value for our shareholders and people.

A Passion to PerformWe do business with a passion to perform. We pursue excellence, adopt a uniqueapproach to produce innovative solutions and build long-term relationships.

Our valuesDeutsche Bank operates by five core values. Our values show how we bring ourbrand to life each and every day.

PerformanceWe are committed to a result-oriented culture.

TrustWe behave reliably, fairly and honestly.

TeamworkWe benefit from the diversity of our business and our people by working togeth-er to achieve success.

InnovationWe are constantly challenging conventional wisdom and developing new solu-tions to meet client requirements.

Customer FocusWe place customers at the centre of our activities and they drive all that we do.

Deutsche Bank A.fi. IstanbulEski Büyükdere CaddesiTekfen Tower No. 209, K. 17-184. Levent, 34394 Istanbul TurkeyTel : +90 212 317 0100Fax : +90 212 317 0105E-mail : [email protected]

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Contents

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Financial HighlightsHistory of Deutsche Bank A.fiAmendments to the Articles of AssociationShareholder Structure, Changes during the Year Qualified Shares and Management SharesMessage from the Chairman and the CEODeutsche Bank A.fi. within the Banking IndustryResearch and DevelopmentOperations in 2006

Board of DirectorsExecutive ManagementStatutory AuditorsCommitteesSummary of Board of Directors' ReportHuman Resources ApplicationsRelated-Party TransactionsIndividuals and Corporations Providing Outsourcing ServicesSocial Responsibility Projects

Statutory Auditor‘s ReportReport of the Audit CommitteeFinancial AssessmentRisk Management PoliciesRatingsFive-Year Financial Highlights

Financial Statements and Disclosures Key Financial Statements and Figures

PART I Introduction

PART II Management and Corporate Governance

PART III Financial Assessment and Risk Management

Independent Auditors' Report

History of Deutsche Bank A.fi.

– Established as Türk Merchant Bank A.fi. in Istanbul in 1987.– Renamed as Bankers Trust A.fi. in 1997.– Deutsche Bank acquired the global assets of Bankers Trust and renamed its

Turkish subsidiary as Deutsche Bank A.fi. in 2000.– Deutsche Bank A.fi. provided corporate banking services under an investment

banking licence until 2004 when it applied to the Banking Regulation andSupervision Agency (BRSA) to accept deposits and expand its product range.

– Obtained permission to collect deposits in October 2004. – Augmented its product range in 2005 to cover corporate cash management, risk

management and settlement services.– Received authorization to participate in Treasury auctions as a market-maker in

both 2005 and 2006.

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Financial HighlightsDecember 31, 2006

Off Balance Sheet Liabilities

Financial Highlights

(YTL 000) 2006

Guarantees and Sureties 200,275Derivatives 1,455,324Items Held in Custody 1,645,415

(%) 2006

Capital Adequacy Ratio 71.32Shareholders' Equity/Assets 21.84

(YTL 000) 2006

Financial Assets Held for Trading 680,032Loans 81,166Total Assets 881,954Deposits 527,981Shareholders' Equity 192,669Interest Income 42,107Net Operating Profit/Loss 54,111

Financial Ratios

3

Amendments to the Articles of Association

Shareholder Structure, Changes during the Year,Qualified Shares and Management Shares

PART I Introduction

The following amendments were made to the Articles of Association of DeutscheBank A.fi. in 2006:

– The headquarter of the Bank was moved to Eski Büyükdere Caddesi, TekfenTower, No. 209, Kat 17-18, 4. Levent, 34394, Istanbul and Article 4 of theArticles of Association was amended accordingly.

– Pursuant to Article 7 of the Banking Law, the share capital of the Bank wasincreased from YTL 20 million to YTL 30 million and Article 8 of the Articles ofAssociation was amended accordingly.

– New articles (29 and 30) were added to Articles of Association, containingprovisions on the Audit Committee as required in Article 24 of the Banking Law.

All shareholders of Deutsche Bank A.fi. are members of the Deutsche Bank Group.

In 2006, in accordance with the permit issued by the BRSA, existing shareholderstransferred their shares to Deutsche Bank AG, increasing its stake to 99.99%. Theshare capital of the Bank was increased from YTL 20 million to YTL 30 million atthe Extraordinary Shareholders' Meeting on November 3, 2006. The capitalincrease was funded by extraordinary reserves and allocated to existingshareholders in proportion to their shares.

Changes in the shareholder structure during the year:

The Chairman and members of the Board of Directors, members of the Board ofStatutory Auditors, the CEO and Assistant General Managers do not own anyshares in the Bank.

January 1, 2006 - April 28, 2006 April 28, 2006 - October 2, 2006

Amount Amount Shareholder No. of Shares (YTL) Share No. of Shares (YTL) Share

Pilgrim Financial Services Llp. 174,000,000 17,400,000 87.0 179,999,970 17,999,997 90.0DB Foreign Investment Co. 20,000,000 2,000,000 10.0 20,000,000 2,000,000 10.0Hac Investments Ltd. 2,000,000 200,000 1.0 10 1 0.001Bankers International Co. 2,000,000 200,000 1.0 10 1 0.001DB International (Delaware) Inc. 2,000,000 200,000 1.0 10 1 0.001Deutsche Bank AG - - - - - -Total 200,000,000 20,000,000 100.0 200,000,000 20,000,000 100.0

October 2, 2006 - November 3, 2006 November 3, 2006 - December 31, 2006

Amount Amount Shareholder No. of Shares (YTL) Share No. of Shares (YTL) Share

Pilgrim Financial Services Llp. - - - - - -DB Foreign Investment Co. 10 1 0.001 15 1.5 0.001Hac Investments Ltd. 10 1 0.001 15 1.5 0.001Bankers International Co. 10 1 0.001 15 1.5 0.001DB International (Delaware) Inc. 10 1 0.001 15 1.5 0.001Deutsche Bank AG 199,999,960 19,999,996 99.994 299,999,940 29,999,994 99.994Total 200,000,000 20,000,000 100.0 300,000,000 30,000,000 100.0

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Message from the Chairman and the CEO

Contribution by foreignbanks

Our major shareholderDeutsche Bank AG

Innovative products,cross-sale packages andpricing

In recent years, as a result of successful structural and judicial reforms, Turkey haswitnessed the emergence of an investment environment backed bymacroeconomic stability. A positive economic outlook, declining interest rates intandem with lower inflation, reduced paperwork and greater tax advantagescontinue to attract increasing foreign direct investment.

Encouraged by the EU accession process, international banks have shown agrowing interest in the Turkish banking industry. Given their increased portfolioquality and improved capital structures, Turkish banks have managed to findbuyers or partners at fair prices. Foreign investors' attention has focused on thebanking industry in line with successful recent regulations and the sector'ssubstantial potential for growth and profitability. Today's Turkish banks, which arehighly advanced in terms of human resources and technology, are turning tointernational banks primarily as a source of low-cost financing opportunities, butalso with regard to more efficient procedures for risk management and productdevelopment.

In order to turn Turkey into a production hub and boost exports, the non-financialsector needs to benefit from cost and tax advantages. As a growing number ofmedium-sized firms from the non-financial sector enter the Turkish market throughpartnerships or mergers, Turkey will enjoy greater dynamism and strengthen itsposition in the EU membership process. This will provide Turkish companies witha substantial competitive edge leading to higher revenue and profitability.

Our objective is to leverage the advantages of the strong global banking networkof our main shareholder, Deutsche Bank AG. We intend to expand our customerbase and broaden both the scope and volume of our current corporate bankingservices.

The last two years have seen particularly dynamic growth. After the introductionof our Settlement and Custody services in 2005, Deutsche Bank AG acquiredBender Menkul De¤erler. The following year, the integration of Bender MenkulDe¤erler into the Deutsche Bank standards system was completed and thecompany was renamed Deutsche Securities Menkul De¤erler A.fi. In 2006, wealso focused more closely on developing new cash management and riskmanagement products. Our target customers for these products are companiesengaging in foreign investment activities, banks and financial institutions, publicinstitutions and local groups exceeding a certain size. We are one of the leadingbanks closely involved in the effective management of country risk of Turkey ininvestment and trade finance.

Our forecast for 2007 calls for the banking industry to see further growth in termsof loan volume without any reduction in loan quality. Any slowdown in economicgrowth will only be very slight. Owing to the entry of new market players, pricecompetition and the pressure on margins will rise, especially for retail bankingproducts. Innovative products, cross-selling packages and pricing will be importantagenda items in 2007 due to intensifying competition and the growing struggle formarket share. We also expect that the pressure on profits will encourage banks toeither enter new segments or to regroup their businesses innovatively to increaseefficiency. The banking industry is likely to encounter increasingly fiercecompetition in 2007 as more and more international banks with strong capitalstructures and ambitious growth plans enter the market.

Jürgen H. Fitschen F. Dilek Yard›mChairman CEO

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Deutsche Bank A.fi. within the Banking Industry

Research and Development

PART I Introduction

Operating in Turkey since 1987, Deutsche Bank A.fi. focuses on corporate bankingbacked by the strong global banking network of its major shareholder, Deutsche BankAG. Deutsche Bank Group with more than 67,000 employees in 73 countries and anasset size of € 1,097 billion (approx. US$ 1.2 trillion), provides corporate bankingservices in Istanbul with the 81 employees of its subsidiary Deutsche Bank A.fi.Deutsche Bank aims to become the first or second bank of all of its clients and iscommitted to offering the highest quality in every product and service group.

The main portfolio of Deutsche Bank A.fi. is composed of T-Bills and government bondsheld for trading. For this reason, risk weighted assets of the Bank falls well below theindustry average. Forward transactions, kept at off balance sheet are also one of themain business of the Bank. Most of the profit is generated from trading gain and foreigncurrency transactions.

In 2006, the Bank obtained a market share of 8.5% in the outright purchase and salesmarket for bonds and bills and OTC fixed-income securities transactions. It also enjoyeda market share of 8.7% in foreign currency transactions against Turkish lira.

The cash credit risk concentration related to clients is contained due to the Bank's limitedclient portfolio comprised of top-tier Turkish and international companies. All potentialclients to the Bank must undergo a rigorous selection process.

In addition, Deutsche Bank A.fi. enjoys a high capital adequacy ratio compared toindustry and peer group averages.

Providing corporate banking services under an investment banking licence until2004, Deutsche Bank A.fi. obtained a commercial banking licence in October 2004to improve its service quality and diversify its product range. The Bank initiated asystem development program following the issuance of the new licence and thelaunching of its new settlement and custody services and cash managementproducts. These supplementary services to the Bank's core business lines wereinitiated in 2006.

Deutsche Bank A.fi. provides capital market services by combining its localexperience with its major shareholder Deutsche Bank AG's global network andexpertise in public offerings, block sales and the derivatives markets.

Believing that Turkey is a major economy with significant growth and investmentpotential, Deutsche Bank A.fi. continues to expand in Turkey with a focus onwholesale corporate banking.

Strong global bankingnetwork

Forward foreign currencytransactions

High capital adequacyratio

Settlement and custodyservices

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With more than 67,000 employees in 73 countries and an asset size of € 1,097billion (approx. US$ 1.2 trillion), the Deutsche Bank Group provides corporatebanking services in Istanbul with the 81 employees of its subsidiary DeutscheBank A.fi.

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Operations in 2006

PART I Introduction

Deutsche Bank A.fi. is organized into three areas: Global Banking, Global Markets

and Divisional Functions.

Global Banking

Global Banking includes Corporate Finance and Global Transaction Banking.

Corporate FinanceDeutsche Bank A.fi., with its customer-oriented approach, provides investment

banking services to leading Turkish companies and financial institutions as well as

to the foreign organizations in its global network. The Bank also offers its robust

financial resources and its expertise in international capital markets to Turkish

companies.

Maintaining its leadership position in Turkish equities and fixed-income markets,

Deutsche Bank A.fi. offers advisory services to many leading investors for major

mergers and acquisitions in Turkey. Capitalizing on its global expertise, Deutsche

Bank A.fi. is also a pioneer in the Turkish investment banking industry.

Global Transaction BankingGlobal Transaction Banking includes two units serving corporate and financial

institutions.

Foreign Trade Finance and Corporate Cash Management: The Bank offers trade

finance, domestic and international payments and risk management services to

Turkish companies as well as local subsidiaries of international companies. These

services include structured products and products supporting daily operations.

The Department's products include collection services in export and import

transactions (based on letters of credit, cash against goods or cash against

documents), export letters of credit, confirmations and discounts for import letters

of credit, bid bonds, advance payment bonds, customs bonds, performance

bonds, letters of guarantee, syndication loans and commodity finance.

The Department launched corporate cash management services in 2006. It will

participate in the Turkish side of the international projects of Deutsche Bank Group

by assessing the market needs and bringing the Group's products to Turkey in the

medium term.

Investment bankingservices

Structured productssupporting dailyoperations

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Cash managementsolutions

Ranking third amongcustodian banks

Risk managementpolicies of clients

Trade Finance and Cash Management - Financial Institutions: The Department

offers cash management solutions as a major correspondent for Turkish banks. It

makes US dollar transfers via Deutsche Bank Trust Company Americas, New York,

euro transfers via Deutsche Bank AG, Frankfurt and sterling transfers via Deutsche

Bank AG, London. The Department offers commercial and treasury clearing in

dollars and euros, liquidity management, check services and sales and support

services for related products. It also provides confirmation, financing and

discounting services for letters of credit issued by Turkish financial institutions

abroad and carries out sales and marketing activities for similar products of global

trade finance.

Settlement and Custody Services: The Bank offers settlement and custody

services to foreign and local institutional investors for their stock and T-bill

investments in Turkey. Major services include participation in capital increases of

stocks in the settlement and custody portfolio, payment of dividends to client

accounts and participation and proxy voting in shareholders' meetings on behalf of

foreign clients. The unit, serving numerous clients with an active marketing

strategy, became third among custodian banks. In a 2006 reader-survey by Global

Custodian magazine, Deutsche Bank A.fi. was chosen the best custodian bank in

Turkey among custodian banks in emerging markets.

Global Markets

The Global Markets Group includes the Research Department and the Debt and

Capital Markets Department conducting sales and marketing activities as well as

transactions in debt and capital markets.

Debt and Capital Markets Department: The Department structures and sells debt

instruments in capital and money markets. It intermediates foreign-currency and

Turkish lira denominated spot and forward transactions and carries out the trading

of debt instruments, government bonds, bills and derivatives for financial

institutions, insurance companies and corporations. Currency and interest-rate risk

management services are offered to the clients within the framework of their risk

management policies.

9PART I Introduction

Research Department: Current macroeconomic and political trends are monitored

to provide information and investment recommendations to internal departments

as well as to clients via daily, weekly, monthly and quarterly reports. The

Department conducts risk and return analyses on the Turkish economy for the Risk

Management, Investment Banking and Capital Markets Departments of the Bank

and the International Origination Department and sales units of Deutsche Bank.

This information is also shared with investors.

Divisional Functions

Divisional Functions include Human Resources, Risk Management, Internal

Control, Audit, Compliance, Technology and Operations.

Human Resources: The Human Resources Department is responsible for

recruitment and personnel planning processes in accordance with the strategies of

the Bank. It is involved in identifying and meeting training and development needs

of the personnel and ensures that fair and competitive compensation and fringe

benefits are offered in compliance with local and global practices. The Department

has created a working environment that complies with Deutsche Bank's global

values.

Risk Management: This Department is responsible for the implementation of

standards on the risk-return characteristics of the Bank's cash flows and standards

for monitoring, controlling and modifying the nature and level of its operations as

issued by the Board of Directors within the framework of Banking Regulation and

Supervision Agency (BRSA) regulations.

Internal Control: This Department is responsible for the entire financial, operational

and other control systems of the Bank. It performs controls that help prevent

unexpected events. If an unexpected event occurs despite all efforts, the

Department investigates, identifies and corrects it and promotes those activities

that help produce expected results. The Department operates within the

framework of the Internal Control Department Regulations approved by the Board

of Directors.

Risk and return analysis

Deutsche Bank's globalvalues

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In 2006, the Bank obtained a market share of 8.5% in the outright purchaseand sales market for bonds and bills and OTC fixed-income securitiestransactions. It also enjoyed a market share of 8.7% in foreign currencytransactions against the Turkish lira.

11PART I Introduction

Compliance: The Department ensures that internal regulations and practices as

well as contractual obligations and other legal documents to which the Bank is a

party or by which the Bank is bound, comply with applicable laws, regulations,

rules of ethics and corporate governance principles. It acts as a bridge between

legal counsels and business units and performs the necessary investigation and

reporting related to the Bank's clients and transactions under applicable laws and

regulations, especially Banking Law No. 5411 and Prevention of Laundering

Proceeds of Crime Law No. 5549. The Department also makes recommendations

to ensure that legal compliance and co-operation is maintained with supervisory

and regulatory bodies established by laws and regulations. It monitors applicable

legislation and advises the Bank's Board of Directors, senior management and

business units on compliance issues.

Audit: The Board of Internal Auditors performs regular and independent audits in

an effort to evaluate the internal control mechanisms of all units within the Bank

on behalf of the Board of Directors. The Board, by following its operational

procedures, ensures that all units of the Bank comply with ethical standards

without compromise. In addition to local and foreign legislation compliance audits,

the work environment of all units is controlled dynamically and effectively, in

accordance with a risk-oriented approach.

Technology and Operations: The Technology Department is responsible for building

and improving an IT infrastructure at Deutsche Bank Group standards to ensure

that the Bank operates efficiently and reliably. It is also responsible for ensuring

that this infrastructure is easily accessible and highly dependable.

The Operations Department is responsible for creating and developing workflows

for transactions performed or mediated by the Global Banking and Global Markets

Groups in accordance with the relevant Deutsche Bank. The Department also

provides controlling, settlement, payment, custody, documentation and reporting

services for these products.

Prevention of launderingproceeds of crime

Risk-oriented controlapproach

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The Board of Directors

Jürgen H. FitschenChairmanMember of the Audit CommitteeDeutsche Bank AG, Managing Director, GlobalBanking and Global Transaction BankingMember of the Group Executive CommitteeHead of Regional Management WorldwideChairman of the Management CommitteeGermany

Jürgen H. Fitschen was born in 1948 and graduatedfrom the University of Hamburg with an MBAdegree. He has thirty years of banking experienceand has been working with Deutsche Bank AGsince 1987. Fitschen has served as Head ofDeutsche Bank Global Banking and Global BankingTransactions since 2004. He is also a member of theDeutsche Group Executive Committee and head ofthe Regional Management Worldwide andManagement Committee Germany. He has beenChairman of Deutsche Bank A.fi. Board of Directorssince May 8, 2001 and was appointed to theDeutsche Bank A.fi. Audit Committee in 2006.

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Dilek Yard›m was born in 1963 and is a graduate ofthe Business Administration Department ofBosphorus University. She obtained her MBA froma joint program at Manchester Business School andUniversity of Wales. She also completed anExecutive MBA at Harvard Business School.Yard›m has nineteen years of banking experience.She joined Deutsche Bank in 1990 and has beenserving as an Executive Board Member since May2001. She is also the CEO of Deutsche Bank A.fi.

F. Dilek Yard›mVice ChairpersonExecutive Board Member, CEO

Ahmet Ar›nç was born in 1970 and graduated fromthe College of Wooster with a degree inEconomics. He has fourteen years experience inthe banking industry and joined Deutsche Bank in1998. He served as Managing Director at DeutscheBank AG, London and was in charge of the tradingof fixed-income products. He has been serving onthe Board of Directors at Deutsche Bank A.fi. sinceAugust 2000 and has been an Executive BoardMember since September 2005.

Ahmet Ar›nçExecutive Board MemberDeutsche Bank AG, LondonGlobal Markets Treasury, Managing Director

> >

13PART II Management and Corporate Governance

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Dal›nç Ar›burnu was born in 1969. Heearned a BS degree in industrialengineering from Bilkent University andan MBA degree from the RochesterInstitute of Technology. He worked atDeutsche Bank A.fi. between 1993 and1996 and has been serving at DeutscheBank AG, London, as Managing Directorin charge of Global Markets since 1996.Ar›burnu has been a Board Member atDeutsche Bank A.fi. since April 2004.

Dal›nç Ar›burnuBoard MemberDeutsche Bank AG, LondonGlobal Markets, Managing Director

Roselyne Renel was born in 1967 and hasseventeen years of experience in thebanking industry. She holds a Certificateof Accounting and Bookkeeping from theLondon Chamber of Commerce andIndustry. Renel joined Deutsche Bank in1994 and serves as the ManagingDirector of Deutsche Bank AG, London, incharge of Credit Risk Management. Shehas also been a Board Member atDeutsche Bank A.fi. since January 2002.

Roselyne RenelBoard MemberDeutsche Bank AG, LondonCredit Risk Management, ManagingDirector

H. Sedat Eratalar was born in 1952. He isa graduate of the Economics and PublicFinance Department of Ankara University.He worked as a partner at ArthurAndersen between the years 1981 and2001 and was a founding partner ofEratalar Management Consulting. Eratalarhas been a Board Member of DeutscheBank A.fi. since August 2001. He wasappointed the Member of the AuditCommittee in charge of Internal Systemsin 2006.

H. Sedat EratalarBoard MemberMember of the Audit Committee incharge of Internal Systems

Selçuk Yorganc›o¤lu was born in 1967. Heholds a BA degree in Economics fromIstanbul University and an MBA degreefrom the University of New Haven. Withfifteen years of experience in the bankingindustry, Yorganc›o¤lu has served invarious positions in Turkey and abroad. Hehas been Managing Director of DeutscheBank AG, London, since 2000.

Selçuk Yorganc›o¤luBoard MemberCorporate FinanceDeutsche Bank AG, LondonGlobal Banking, Managing Director

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>>

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Executive Management

Özlem Meriç Erten, Assistant General Manager - Global Markets, Treasury Özlem Meriç Erten was bornin 1969 and holds a BA degree in Business Administration from the Middle East Technical University and anMBA degree from the International Banking and Finance Department of the University of Southampton. Shehas fifteen years of experience in the banking industry and joined Deutsche Bank A.fi. in 1994.

Oktay fiehsuvaro¤lu, Director - Global Markets, Sales Oktay fiehsuvaro¤lu was born in 1970 and is agraduate of the Department of Business Administration at California State University. He has fourteen yearsof banking experience and has been working at Deutsche Bank A.fi. since 1998.

Tevfik Aksoy, Assistant General Manager - Global Markets, Research Tevfik Aksoy was born in 1967 andgraduated from the Mechanical Engineering Department at Middle East Technical University, where he alsoobtained his MBA degree. Subsequently, he earned MA and PhD degrees in Economics from the Universityof Delaware. He has eighteen years of business experience, twelve of which is in the banking industry. Hehas been working at Deutsche Bank A.fi. since 2004.

Arzu Orhon, Assistant General Manager - Global Banking, Foreign Trade Finance and Corporate CashManagement Arzu Orhon was born in 1969. She is a graduate of the Economics Department of BosphorusUniversity and holds an MA degree in Banking from Exeter University. She has twelve years of bankingexperience in an overall business experience of fourteen years. She has joined Deutsche Bank A.fi. in 2000.

Güzide Nartur, Director - Global Banking, Trade Finance and Cash Management - Financial InstitutionsGüzide Nartur was born in 1954 and is a graduate of the Economics Department at the City University of NewYork. Nartur has thirty years of experience in the banking industry and joined Deutsche Bank in 1989.

Hakan Ulutafl, Director - Global Banking, Custody and Settlement Services Hakan Ulutafl was born in1965 and earned a BA degree in Business Administration from Istanbul University, an MA degree in BusinessManagement from Marmara University and an MBA degree from University of North Carolina. In hisseventeen-year career, Ulutafl has worked in the banking industry for fifteen years. He has been working atDeutsche Bank A.fi. since 2004.

Hakan Ulutafl Güzide Nartur Oktay fiehsuvaro¤lu F. Dilek Yard›m Tevfik Aksoy Özlem Meriç ErtenArzu Orhon

15PART II Management and Corporate Governance

Ali Do¤rusöz, Assistant General Manager, Technology and Operations Ali Do¤rusöz was born in 1963and graduated from the Mechanical Engineering Department of North Carolina State University. He has anMS degree in Mechanical Engineering from the Middle East Technical University. He has nineteen years ofexperience and has been working at Deutsche Bank A.fi. for the last five years.

Özge ‹nan, Assistant General Manager, Risk Management Özge ‹nan was born in 1970 and is a graduateof the Business Administration Department of Istanbul University. She has been working in the bankingindustry for thirteen years. She has joined Deutsche Bank A.fi. in 1998.

Betül Mizan Göksal, Assistant General Manager, Human Resources Betül Mizan Göksal was born in 1967and graduated from the Psychology Department of Bosphorus University. She has fifteen years of experiencein the field of human resources and has been working at Deutsche Bank A.fi. since 1996.

Yekta Bahad›ro¤lu, Director, Audit Yekta Bahad›ro¤lu was born in 1969 and holds a BA degree inEconomics from Middle East Technical University and an MBA degree from RSM Erasmus University. Hehas been working in the banking industry since 1996. He has joined Deutsche Bank A.fi. in 2002.

Mustafa Kemal fiahin, Director, Compliance Mustafa Kemal fiahin was born in 1970 and is a graduate ofthe Economics Department of Middle East Technical University. He completed his MBA degree at WarwickBusiness School and started working in the banking industry in 1992. He has been serving at Deutsche BankA.fi. since 2005. The Board of Directors appointed him AML Officer in accordance with the Anti-MoneyLaundering Law.

Kumru Besim*, Assistant Manager, Internal Control Born in 1973, Kumru Besim is a graduate of theBusiness Administration Department of Istanbul University. She has worked in the Financial Planning andControl Departments of various banks since 1998. At the end of 2006, she joined Deutsche Bank A.fi.

Ali Do¤rusözM. Kemal fiahin Özge ‹nan Yekta Bahad›ro¤luBetül Mizan Göksal

* She does not take place in photo

16

Statutory Auditors

Erdal Hasan Ortaç, Statutory Auditor Born in 1948, Erdal Hasan Ortaç holds a BAdegree from the Istanbul Economic and Commercial Sciences Academy. He hasthirty-five years of experience and has been serving as a statutory auditor sinceJune 2006.

Sacit Akdemir, Statutory Auditor Sacit Akdemir was born in 1964 and graduatedfrom the Public Administration Department of Ankara University. He earned hisMA degree in Economics at Eastern Michigan University. He has served in variouspositions in public and private sectors since 1986. He was appointed statutoryauditor in 2006.

Committees

Audit CommitteeJürgen Fitschen, President

Sedat Eratalar, Member

The Audit Committee was established on October 31, 2006 in accordance with

Resolution No. 48/6 by the Board of Directors. The Committee is composed of

Jürgen Fitschen and Sedat Eratalar. This Committee convened once in the 2006

accounting year on December 22, 2006.

Risk CommitteeÖzge ‹nan, President

Kumru Besim, Member

M. Kemal fiahin, Member

Yekta Bahad›ro¤lu, Member

The Risk Committee meets weekly to design, plan and coordinate internal control

processes and activities together with the Internal Control Unit and the Board of

Internal Auditors. When necessary, the Committee holds extraordinary meetings

upon the invitation of its president. Meetings of the Committee are attended by

the president and members, as well as Sedat Eratalar, who is a member of the

Board of Directors and the Audit Committee in charge of internal systems.

The Risk Committee is responsible for defining risk policies and developing internal

control processes and activities together with the Internal Control Unit, Internal

Audit Unit, Compliance and senior management depending on the nature of the

Bank's operations.

17

Assets and Liabilities Committee (ALC) F. Dilek Yard›m, President

Özge ‹nan, Risk Committee President

Özlem Meriç Erten, Assistant General Manager, Global Markets Treasury

Arzu Orhon, Assistant General Manager, Global Banking, Foreign Trade Finance

and Corporate Cash Management

Hakan Ulutafl, Director, Global Banking, Custody and Settlement Services

Joachim Bartsch, Director, Deutsche Bank Frankfurt Group Treasury

The ALC convenes every quarter under the presidency of the Bank's CEO. This

Committee reviews the Bank's assets and liabilities, evaluates risk-bearing assets,

liquidity and market risks and analyzes future capital requirements.

All committee meetings were attended by the members either in person or via

teleconferencing.

Participation of Board Members and Committee Members in Relevant Meetings

The Board of Directors meets at least once a month in accordance with applicablelegislation and the Bank's Articles of Association. Within the scope of its dutiesand responsibilities, it makes decisions regarding the Bank's activities. Whendeemed necessary, the Chairman of the Board of Directors calls for extraordinarymeetings. In 2006, the members participated in all Board meetings regularly,conforming to the criteria to form a quorum to convene and take decisions.

The Audit Committee meets monthly, while the Risk Committee meets weekly oron an ad hoc basis upon the invitation of its president. In principle, committeemembers participate in all meetings. However, when they are absent due tobusiness travel or other reasons, they participate via teleconferencing. In 2006, themembers participated in all committee meetings regularly, conforming to thecriteria to form a quorum to convene and take decisions.


18

Summary of Board of Directors' Report

Human Resources Applications

Total assets mounting

Evaluating performanceand setting targets

As of December 31, 2006, total assets of the Bank increased by 193% comparedto 2005, to YTL 881,954,000. The main driver behind this increase was theincrease in trading security portfolio.

Deposits with banks decreased by 80%, from YTL 41,736,000 to YTL 8,542,000.Investment decisions are reviewed according to market conditions, since the Bankmaintains high level of liquidity at all times.

Deposits, which were YTL 107,720 thousand by the end of 2005, reached YTL527,981 thousand by the end of 2006, which corresponds to a 390% growth. Bythe end of the year, repo transactions had provided the YTL 135,310 thousandportion of total funding.

Loans increased by 28%, from YTL 63,414,000 in 2005 to YTL 81,166,000 in 2006.All loans were short-term.

Off-balance-sheet liabilities increased by 2%, from YTL 1,622,287 thousand onDecember 31, 2005 to YTL 1,655,599,000 on December 31, 2006.

The share capital of the Bank was increased from YTL 20 million to YTL 30 millionupon the resolution made at the Extraordinary General Meeting of Shareholdersheld on November 3, 2006. The capital increase was funded with extraordinaryreserves. As of December 31, 2006, capital reserves were YTL 31,866 thousandand total profit reserves were YTL 85,517 thousand.

Net income after-tax income was YTL 45,286,000 in 2006. As in previous year,most of the income came from capital markets and foreign currency transactions.

Deutsche Bank A.fi. had 81 employees as of December 31, 2006; 2% of theseemployees are high-school graduates and 73% are university graduates while 25%hold graduate and postgraduate degrees.

Training needs are identified by department heads and the Human ResourcesDepartment. The Human Resources Department engages local and foreigntraining companies for training courses targeting professional and personaldevelopment.

Performance evaluation and target setting is carried out regularly, using an onlinesystem. Evaluations start with employee self-assessment and continue withsupervisor feedbacks. Results of performance evaluations guide career planningand help identify training and development opportunities.

Recruitment of a candidate for a vacant position is subject to the joint approval ofthe head of the Human Resources Department and the CEO. Seniority andcompensation, depending on the personnel's level within ranks, becomesapplicable after approval by the relevant division head and/or the Board ofDirectors, and finally by the CEO.

Recommended promotions, after a preliminary review by the managers of therelated groups or divisions, are discussed and decided on by the PersonnelCommittee, taking into account the educational background, experience and pastperformance of the employee. Promotions become effective after approval by thehead of the group or the division. The Board of Directors is informed about thepromotions and is asked to approve when necessary.

19

Related-Party Transactions

Various transactions are carried out with group companies during regular banking

activities. These transactions are conducted on commercial bases and are charged

at prevailing market prices. The profit or loss generated by these transactions is

reflected in the income statement.

Deutsche Bank A.fi.'s related-party transactions are explained in detail in the

disclosures to the financial statements.

In 2006, outsourcing services were obtained from Deutsche Bank AG for Nostro

Reconciliation.

Individuals and Corporations Providing Outsourcing Services

Deutsche Bank A.fi. believes that social responsibility is as important as client

satisfaction, employee motivation and the quality of the working environment. The

Bank performed the following social responsibility projects in 2006:

– In January 2006, Deutsche Bank A.fi. became one of the main sponsors of the

project conducted by the Social Volunteers Foundation for the renovation of

public libraries in Turkey.

– The Bank has been one of the sponsors of the Department of Business

Informatics at Marmara University teaching in German since 2002.

– The Bank is one of the sponsors of the intercultural educational project (AFS)

of the Turkish Culture Foundation.

– The Bank was the main sponsor of the 2006 Istanbul Contemporary Art Fair

held on December 21-24, 2006.

Social Responsibility Projects


20

Statutory Auditors' Report

Internal control, internalaudit and riskmanagement systems

Risk reporting

The 2006 transactions and accounts of Deutsche Bank A.fi. have been audited bystatutory auditors Erdal Hasan Ortaç and Sacit Akdemir in accordance with Banking LawNo. 5411, other applicable legislation and the Bank's Articles of Association. The auditorschecked whether the balance sheet and the income statement were consistent withaccounting records and whether such records were in conformity with the underlyingdocuments.

Based on their audit, the statutory auditors recommend the General Meeting ofShareholders to accept the Board of Directors' proposal to approve the Bank's 2006balance sheet and income statement and to allocate and distribute the net profit of theBank as dividend.

Report of the Audit Committee

The Audit Committee was established by a resolution of the Board of Directors on

October 31, 2006. In the 2006 accounting year, the Committee did not report any

adverse events in relation to the internal control, internal audit and risk

management systems of the Bank. The Committee made regular interviews with

division heads responsible for the internal systems of the Bank. The Bank's risks

and operations were monitored closely and all necessary measures were taken to

ascertain and eliminate risks without loss of time. Evaluations of independent

auditors have been reviewed to ensure compliance of the Bank's accounting

practices with laws and other applicable legislation. No discrepancies were noted.

Our observations and opinions on the Bank's risk management and internal control

activities are as follows:

Supervision by the Board of Directors and Executive Management: Members

of the Board of Directors work actively in the banking business, are specialized in

various fields of the banking profession and possess knowledge and are

experienced on the types and nature of risks and how they can be managed.

Executive management is made up of individuals who possess knowledge and

experience in risk-related fields and is in close cooperation with the Board of

Directors. The team is able to capitalize on Deutsche Bank AG's experience and

expertise.

Responsibilities have been identified to provide a continuous flow of information

on relevant risks emerging from developments in financial markets, risk

management practices and the Bank's operations. Information on risk-related

issues are reported daily.

The Board of Directors and Executive Management monitor the reliability and

functioning of accounting and reporting systems. This monitoring is conducted by

experts who are not users of these systems.

21PART III Financial Assessment and Risk Management

The Board of Directors, Executive Management and the parent company

Deutsche Bank AG continuously review risk limits and take necessary preventive

measures in response to changing market conditions.

The Board of Directors, Executive Management and the parent company Deutsche

Bank AG are committed to ensuring that the Bank's business units and business

lines employ individuals who possess the necessary knowledge, experience and

expertise in banking and related operations. Employees also enjoy the benefits of

the experience and expertise of Deutsche Bank AG experts.

The Board of Directors, Executive Management and the parent company Deutsche

Bank AG developed a “Code of Ethics” and a “Code of Conduct” to ensure that

employees perform operations in a safe and reliable manner, do not compromise

integrity and adopt prudent management methods. These codes have been

distributed to and signed by all new employees at the time of recruitment.

The Board of Directors, the Executive Management and the parent company

Deutsche Bank AG control all operations of the Bank adequately, using various

internal audit and control systems.

Before starting a new business or offering a new service, the Board of Directors,

the Executive Management and the parent company Deutsche Bank AG require

the implementation of the New Product and New Business Approval procedure in

order to asses all potential risks. Necessary infrastructure and internal controls are

available for the management of risk.

Risk management policies, implementation methods and limits: Policies,

implementation methods and limits have been put in place to identify, measure,

monitor and control the risk in the Bank's T-bill and government bond trading

activities.

These policies, implementation methods and limits are consistent with the

financial strength, goals, objectives and management experience level of both

Deutsche Bank A.fi. and Deutsche Bank AG. Following the determination of the

risk policies by Deutsche Bank AG, the Bank's Senior Risk Committee evaluates

these policies and adopts those that are suitable for Deutsche Bank A.fi.

Hierarchical roles and responsibilities are set out in an organization chart.

Prudent managementapproach

Procedures for NewProduct and NewBusiness Approval

Risk policies are devisedby Deutsche Bank AG

22

Financial Assessment

Risk Management Policies

The Bank makesinvestment decisionsdepending on prevailingmarket conditions

Cash and non-cashcorporate loans

The New Product and New Business Approval procedures allow the Bank to

provide the necessary infrastructure for identifying, monitoring and controlling risk

before starting a new operation or launching a new product.

In 2006, we did not identify any transaction that might result in a risk of

considerable magnitude. The risk management and internal control systems of the

Bank, in their entirety, are capable of identifying potential risks in advance.

On behalf of the Audit Committee

Sedat EratalarPresident

The capital adequacy ratio of Deutsche Bank A.fi. is above industry and peer groupaverages. On-balance-sheet and off-balance-sheet foreign currency balances aremanaged concomitantly. The majority of the Bank's assets are made up of securitiesheld-for-resale purposes, while the majority of its income comes from capital marketsand foreign currency transactions. Thus, the share of interest income is well below theindustry average, while total non-interest income is above the average.

The Bank manages liquidity and interest risk diligently by selling forward securities toDeutsche Bank AG, London, to alleviate risk that exceeds a reasonable level.Management takes into account the funding limits of Deutsche Bank AG and its capitalwhen managing liquidity and interest risk. The Bank maintains high levels of liquidity atall times and makes investment decisions depending on prevailing market conditions.

A Summary of the Board of Directors' Report was presented at the General Meeting ofShareholders and contains an analytical financial assessment.

General Policies

Deutsche Bank A.fi. does not trade on the stock exchange. The Bank only holdsYTL-denominated T-bills and government bonds for resale purposes. The Bankcarefully considers not to exceed a six-month maturity in its transactions on theinterbank money market. It does not grant cash or non-cash corporate loans withmaturities that exceed two years. The Bank does not allow the balance of itsoutstanding YTL-denominated corporate loans to exceed twice its shareholders'equity.

23PART III Financial Assessment and Risk Management

Foreign currency transactions with banks and institutions are carried on a cash-against-delivery basis. This rule does not apply to banks and institutions to whichlimits have been allocated. The Bank performs an approval procedure for newproducts and new businesses. All operational risk insurance transactions arecoordinated with Deukona. Issues related to reputational risk are discussed anddecided at the Reputational Risk Committee. Emergency plans are reviewed andtested periodically.

The Internal Control Department controls compliance with applicable policies andlimits on a daily basis. Any violation is reported to Executive Management, therelated department and the Audit Committee member in charge of internalsystems.

Risk Management

Risk management, risk monitoring and management information systems basicallymonitor and minimize market, credit and operational risks. The Bank's riskmonitoring applications and reports take into consideration these major risks.

Market risksOur parent company has determined the Bank's VaR limit in accordance with theconsolidated country risk of Turkey.

Deutsche Bank A.fi.'s Market Risk Management Unit carries out sensitivityanalyses on a daily basis and sends the results to London to be used in calculatingVaR. Daily profit/loss calculation is reported separately for trading and positionprofits and losses in order to allow for retrospective tests. A standard method isused to assess the risks of Deutsche Bank A.fi. Accordingly, risks are reviewedmonthly, while sensitivity analyses are reviewed weekly at Risk Committeemeetings.

Credit RisksCredit risk is managed jointly with relationship managers and credit risk managers.The credibility of clients who have been subject to Client Adoption procedures isassessed using a credit risk schedule. Limits are allocated and reviewedperiodically based on the outcome of this schedule.

All limits become effective after approval by the Board of Directors.

Operational RisksWorkflows and processes are documented in order to minimize operational risksrelated to products. Crosschecks are performed at required points of control.

Workflow procedures also contain lists of documents that must be obtained legallyand locally. Internal Control and Operations Departments ensure that profit centresprovide the necessary documents before the risk occurs. Any modification oninformation systems must be tested in advance. Such modifications are only madeafter the relevant test is completed successfully. These tests, as well as precedinganalyses are all documented.

Reputational RiskCommittee

Daily sensitivity analyses,weekly Risk Committeemeetings

Crosschecks at controlpoints

24

Segregation of powers

Compliance withlegislation

Internal Control

The principle of Segregation of Powers is maintained at points of control; internalcontrol processes are independent of business line functions within the Bank andthe roles and responsibilities in the corporate structure of the Bank are separatedon a functional basis. Internal control within the internal audit system is performedindependently and objectively.

The internal control system has been designed in accordance with the nature andlevel of the risk that is inherent in the trading operations of the Bank.

To ensure compliance with applicable legislation, legal consulting services areoutsourced from W&C Derman Law Office and tax consulting services from E&YKuzey Yeminli Mali Müflavirlik A.fi.

Compliance

The Bank receives legal consulting services from W&C Derman Law Office andHergüner Bilgen Özeke Law Office to ensure compliance with applicablelegislation. Bank employees are informed through internal control systems. Thecompliance of bank employees with laws, regulations and internal regulations iscontrolled regularly. The Compliance Department carries out investigations andissues reports on the Bank's clients and transactions under applicable laws andregulations, especially Banking Law No. 5411 and Prevention of LaunderingProceeds of Crime Law No. 5549. The Department monitors applicable legislationand advises the Bank's Board of Directors, Executive Management and businessunits when necessary.

Board of Internal Auditors

Internal controls and information systems are audited periodically. Audit reportsare prepared; discrepancies and associated risks are classified. The executivemanagement's action plan to eliminate such discrepancy is explained and adeadline is set. These deadlines are monitored and delays are reported.

25

Ratings

PART III Financial Assessment and Risk Management

Deutsche Bank A.fi. is not rated by rating agencies.

Ratings of the Bank's parent company Deutsche Bank AG are as follows:

Short-term Rating Long-term Rating Outlook Individual Rating

Standard & Poor's A-1+ AA- Positive n.a.

Moody's Investors Service P-1 Aa3 Stable B-

Fitch Ratings F1+ AA- Stable B

26

Five-Year Financial Highlights

* Due to reporting standards change reserve deposit item was moved under the “Banks and Other Financial Institutions” item, the “Various Receivables”item under the “Other Assets” item and the “Taxes, Duties and Charges Payable” item under the “Other Liabilities” item in the financial statements ofDecember 31, 2006 and December 31, 2005.

** Due to reporting standards, “Other Interest Income” and “Other Interest Expense” items were presented under the relevant items in the financialstatements of December 31, 2006 and December 31, 2005.

Assets (YTL 000) 2006 2005 2004 2003 2002

Cash and Central Bank 42,575 1,203 188 2,481 380Financial Assets and Derivative Financial Assets Held-for-Trading (net) 680,943 163,978 298,662 22,389 14,598Banks and Other Financial Institutions 8,542 41,736 13,428 83,558 93,615Money Market Placements 50,072 - 1,000 56,920 71,300Financial Assets Available-for-Sale (net) - - - - -Loans 81,166 63,414 10,932 20,488 23,408Factoring Receivables - - - - -Investments Held-to-Maturity (net) - - - - -Investment Associates (net) - - - - -Subsidiaries (net) - - - - -Joint Ventures (net) - - - - -Financial Lease Receivables (net) - - - - -Derivative Financial Assets Held for Risk Management - - - - -Reserve Deposit -* -* 1,073 2,147 3,156Miscellaneous Receviables -* -* 2,259 86 -Accrued Interest Receivables -** - ** 24,396 14,561 5,028Tangible Assets 4,312 3,965 2,295 2,172 2,066Intangible Assets (net) 163 - - - -Tax Assets 603 - - - -Assets Held-for-Resale (net) - - - - -Other Assets 13,578 26,571 10,868 17,978 5,460

Total Assets 881,954 300,867 365,101 222,780 219,011

Liabilities (YTL 000) 2006 2005 2004 2003 2002

Deposits 527,981 107,720 14,266 - -Financial Liabilities Held-for-Trading 3,200 4,678 - -Funds Borrowed - - - 75,268 133,278Interbank Money Market 135,310 2,182 187,000 - -Marketable Securities Issued (net) - - - - -Funds - - - - -Miscellaneous Payables 414 167 425 9,440 14,720Other Liabilities 1,425 527 100 230 2,217Taxes, Duties, Charges and Other Premiums Payable -* -* 4,318 631 606Factoring Payables - - - - -Leasing Payables (net) 427 - - - -Derivative Financial Liabilities Held for Risk Management - - - - -Account Interest Payables -** - ** 5,097 4,918 3,374Provisions 20,528 38,210 28,778 29,077 14,601Payables for Asset Held for Sale - - - - -Subordinated Debts - - - - -Shareholders' Equity 192,669 147,383 125,117 103,216 50,215

Total Liabilities 881,954 300,867 365,101 222,780 219,011

Income Statement (YTL 000) 2006 2005 2004 2003 2002

Interest Income 42,107 15,546 22,676 49,634 43,411Interest Expense 117,245 80,830 77,120 84,456 50,201Net Interest Income (75,138) (65,284) (54,444) (34,822) (6,790)Net Fees and Commission Income 4,130 (8,869) 4,434 8,031 2,758Net Trading Income (Loss) 139,165 138,144 152,161 126,487 54,364Other Operating Income 27,819 3,043 1,055 1,076 718Net Operating Profit/Loss 95,976 67,034 103,206 100,772 51,050Provisions for Loan or Other Receivables (-) 534 385 302 1,079 1,239Other Operating Expenses (-) 41,331 30,580 21,033 18,449 14,512Net Operating Profit/Loss 54,111 36,069 81,871 81,244 35,299Net Monetary Position Gain (Loss) - - (13,696) (8,594) (13,806)Profit/Loss Before Taxes 54,111 36,069 68,175 72,650 21,493Provision for Taxes (-) 8,825 11,310 23,826 24,777 11,822Net Operating Profit/Loss After-Tax 45,286 24,759 44,349 47,873 9,671Extraordinary Profit/Loss After Tax - 8 - 76 -Net Profit (Loss) 45,286 24,767 44,349 47,949 9,671


Deutsche Bank Anonim fiirketiUnconsolidated Financial Statements as of and for the Year Ended December 31, 2006(Convenience Translation of Unconsolidated Financial Statements and

Related Disclosures and Footnotes Originally Issued in Turkish)

With Independent Auditors' Report Thereon

Akis Ba¤›ms›z Denetim ve Serbest Muhasebeci Mali Müflavirlik Anonim fiirketi February 23, 2007

This report contains “Independent Auditors' Report” comprising 1 page and; "Unconsolidated financial statements and related disclosures and footnotes”comprising 65 pages.


Independent Auditors' ReportOriginally Prepared and Issued in Turkish

To the Board of Directors of Deutsche Bank Afi:

We have been engaged to audit the unconsolidated balance sheet of Deutsche Bank Afi (“the Bank”) as ofDecember 31, 2006 and the related income statement, statement of cash flows, statement of changes inshareholders' equity for the year then ended and a summary of significant accounting policies and other explanatorynotes.

Disclosure for the responsibility of the Bank's Board of Directors:

The Bank's Board of Directors is responsible for establishing and maintaining effective internal control over financialreporting to prevent the misstatements caused by error or fraud, that are material to the financial statements; andfor adopting sound accounting policies in compliance with the “Regulation on Accounting Applications for Banksand Safeguarding of Documents” published on the Official Gazette no.26333 dated November 1, 2006, TurkishAccounting Standards, Turkish Financial Reporting Standards and the decrees, directives and guidances publishedby the Banking Regulation and Supervision Agency (BRSA) on accounting and financial reporting principles.

Disclosure for the Responsibility of the Authorized Audit Firm:

Our responsibility, as independent auditors, is to express an opinion on these financial statements based on ouraudit. We planned and conducted our audit to obtain reasonable assurance as to whether the financial statementsare free of material misstatement. Our audit includes using the audit techniques for the purpose of obtainingevidence supporting the amounts and disclosures in the financial statements. The selection of the audit techniquesis made in accordance with our professional judgment by taking the effectiveness of the controls over financialreporting into consideration and assessing the appropriateness of the applied accounting policies. We believe thatour audit provides a reasonable basis for our opinion.

Independent Auditors' Opinion:

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial positionof Deutschebank Afi as of December 31, 2006 and the result of its operations and cash flows for the year thenended in accordance with the accounting principles and standards as per the existing regulations described inArticle 37 of (Turkish) Banking Law No 5411 and the decrees, directives and guidances published by the BRSA onaccounting and financial reporting principles.

Istanbul, Akis Ba¤›ms›z DenetimFebruary 23, 2007 ve Serbest Muhasebeci

Mali MüflavirlikAnonim fiirketi

Bülent EjderPartner, Certified Public Accountant

Additional paragraph for convenience translation to English:

As explained in Note 3.1, the accompanying financial statements are not intended to present the financial positionand results of operations in accordance with the accounting principles and practices generally accepted in countriesand jurisdictions other than Turkey.

30

SECTION ONE General Information

I. History of the Bank including its incorporation date, initial legal status, amendments to legal statusII. Bank's shareholder structure, management and internal audit, direct and indirect shareholders, change

in shareholder structure during the year and information on Bank's risk groupIII. Information on the Bank's board of directors' chairman and members, audit committee

members, vice chairperson,, assistant general managers, change in top management and their shareholdings in the Bank

IV. Information on the Bank's qualified shareholdersV. Summary information on the Bank's activities and operationsVI. Other informations

SECTION TWOUnconsolidated Financial Statements

I. Balance SheetsII. Off-Balance Sheet ItemsIII. Income Statement IV. Statement of changes in Shareholders' Equity V. Statement of Cash FlowsVI. Statement of profit distribution

SECTION THREEAccounting Policies

I. Basis of presentationII. Strategy for use of financial instruments and foreign currency transactionsIII. Forwards, options and other derivative transactionsIV. Interest income and expensesV. Fees and commissionsVI. Financial assetsVII. Impairment of financial assetsVIII. Netting of financial instrumentsIX. Repurchase and resale agreements and securities lendingX. Assets held for sale and discontinued operationsXI. Goodwill and other intangible assetsXII. Tangible assetsXIII. Leasing activitiesXIV Provisions and contingenciesXV. Obligations of the Bank concerning employee rightsXVI. TaxationXVII. Additional explanations on borrowing VIII. Shares and share issuancesXIX. Guarantees and acceptantance XX. Government incentivesXXI. Segment reporting

31Independent Auditors' Report

SECTION FOURFinancial Position and Results of Operation

I. Capital adequacy ratio

II. Credit risk

III. Market risk

IV. Operational risk

V. Foreign currency risk

VI. Interest rate risk

VII. Liquidity risk

VIII. Fair values of financial assets and liabilities

IX. Transactions carried out on behalf of customers, items held in trust

X. Segment Reporting

SECTION FIVEDisclosures and Footnotes on Unconsolidated Financial Statements

I. Assets

II. Liabilities

III. Off-Balance Sheet Items

IV. Income Statement

V. Statement of changes in shareholders' equity

VI. Statement of cash flows

VII. The Bank's risk group

VIII. Domestic, foreign and off-shore branches and foreign reprensentative offices

SECTION SIXOther Disclosures and Notes

I. Other disclosures on activities of the Bank

SECTION SEVENIndependent Auditor's Report

I. Disclosures on Independent Auditors' Report

II. Disclosures prepared by Independent Auditor

Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish

Deutsche Bank Anonim fiirketi Unconsolidated Financial Report as of and For the year ended December 31, 2006(Thousands of New Turkish Lira [TRY])

32

SECTION ONEGeneral Information

I- History of the Bank including its incorporation date, initial legal status, amendments to legal status

Deutsche Bank Anonim fiirketi (“the Bank”) was established by the permission of the Council of Ministers

dated December 16, 1987 and numbered 87/12432. This permission was published in the Official Gazette dated

December 26, 1987 and it was registered at April 4, 1988. The “Articles of Association” of the Bank was

published in Trade Registry Gazette on April 7, 1988. The commercial title of the Bank on foundation was “Türk

Merchant Bank Afi” and has been changed to “Bankers Trust Afi” on April 17, 1997. After the global merger

of Bankers Trust and Deutsche Bank, the Bank's commercial title has been changed to “Deutsche Bank Afi”

on March 1, 2000. The Bank obtained the permission to accept deposits with the article numbered 1381 and

dated September 8, 2004 of Banking Regulatory and Supervisory Agency (“BRSA”). This permission became

valid after it was published in Official Gazette dated October 15, 2004 and numbered 25614. The Bank's head

office is located in ‹stanbul and does not have any branches.

II. Bank's shareholder structure, management and internal audit, direct and indirect shareholders, changein shareholder structure during the year and information on Bank's risk group

Deutsche Bank AG is the Bank's shareholder, which directly or indirectly holds the capital structure,

management and the audit responsibility.

The Bank's Board of Directors decided to increase the share capital of the Bank from TRY 20 million to TRY 30

million from the extraordinary reserves, on October 6, 2006 with the resolution number 46.

On October 2, 2006 the Bank's Board of Directors accepted the share transfer with the resolution number 45.

After the transfer of the shares, Deutsche Bank AG's shares were increased to 99.99%.

Paid-in UnpaidShareholder Shares Ownership Capital Portion

Deutsche Bank AG 30,000 100.00 30,000 -

Total 30,000 100.00 30,000 -

As of December 31, 2006, the Bank's paid-in capital is comprised of 300 million unit shares whose historical

nominal unit values are TRY 0.1. The Bank is one of the group companies of Deutsche Bank Group.


III. Information on the Bank's board of directors' chairman and members, audit committee members, chiefexecutive officer,executive vice presidents, change in top management and their shareholdings in theBank

Experience in Banking

Appointment and BusinessTitle Name / Surname Date Education Administration

Chairman Jürgen Fitschen 08.05.2001 University of Hamburg MBA 30 years

Vice Chairperson Fatma Dilek Yard›m 08.05.2001 Graduate: Bo¤aziçi University 19 years(General Manager) Faculty of Economics,

BA Master: Banghor Institute of Finance; BusinessAdministration

Member of BOD Marie Therese 29.01.2002 London Chamber 17 yearsRoselyne Renel of CommerceAhmet Ar›nç 29.08.2000 Graduate: College of 14 years

Wooster, EconomicsDal›nç Ar›burnu 01.04.2004 Graduate: Bilkent Universityi 13 years

Industial Engineering DepartmentMaster: Rochester Institute of Technology, BA

H.Sedat Eratalar 02.08.2001 Graduate: Ankara University 25 yearsEconomics and Finance Departmenr

Selçuk Yorganc›o¤lu 14.11.2006 Graduate: ‹stanbul University 15 yearsFaculty of EconomicsEconomics DepartmentMaster: University of New Heaven

Assistant General Özge ‹nan 07.12.2001 Graduate: ‹stanbul University 13 yearsManagers Faculty of Economics

Business AdministrationArzu Orhon 07.12.2001 Graduate: Bo¤aziçi University. 12 years

Faculty of EconomicsEconomics DepartmentMaster: ExeterUniversity BA

Ali Do¤rusöz 18.12.2001 Graduate: North Carolina 12 yearsUniversity, Mechanical Engineering

Tevfik Aksoy 16.11.2006 Graduate: METU Mechanical Eng. 11 yearsMaster: Univ. of DelawareDoctorate: Univ. of Delaware

Özlem Erten 01.04.2004 Graduate: METU BA 15 yearsMaster:University of Southampton MSc

A.Betül Göksal 16.11.2006 Graduate: Bo¤aziçi University 15 yearsPsychology Department

Auditors Erdal Hasan Ortaç 27.06.2006 Graduate: ‹stanbul University 40 years‹limler Akademisi

Sacit Akdemir 27.06.2006 Graduate: Ankara University 20 yearsPublic Administation



Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in TurkishDeutsche Bank Anonim fiirketi Unconsolidated Financial Report as of and For the year ended December 31, 2006(Thousands of New Turkish Lira [TRY])

34

Changes

Title Currrent Year Outgoings Current Year Appointments

Member of Board of Directors Selçuk Yorganc›o¤lu

Assistant General Managers Tevfik Aksoy

A.Betül Göksal

Legal Auditors Berna Bay›nd›r Erdal Hasan Ortaç

Berran Karakaya Sacit Akdemir

The Bank shares owned by the chairman, vice chairman and the members of board of directors are insignificant

amounts, if any.

IV. Information on the Bank's qualified shareholders:

The Bank's qualified shareholder, which has direct or indirect control power is Deutsche Bank AG.

Paid-in Unpaid Shareholder Shares Ownership Capital PortionDeutsche Bank AG 30,000 100.00 30,000 -

Total 30,000 100.00 30,000 -

V. Summary information on the Bank's activities and services

Activities of the Bank as stated at its Articles of Association are as follows:

• All banking operations,

• Jointly establishing enterprises with the corporates or individiduals, joint ventures, investing to the existing ornewly established commercial and industrial institutions, banks and financial institutions and transferring theshares of those enterprises.

• Providing commercial and insurance activities on behalf of the Bank or the domestic and foreign institutions,acting as agencies, and providing commitments to public and non-public entities in compliance with theregulations set by the Banking Law and the related legislations.

• Purchasing and selling marketable securities on behalf of the Bank or third parties, issuing debt securities bytaking the necessary permissions in accordance with the related legislation, establishing and managinginvestment funds and performing other capital market transactions, which are allowed by the Banking Law andoperating in stock exchange.

• Performing transactions in foreign currency markets including forward transactions on behalf of the Bank orits'customers.

• Acquiring intangible assets related with the Bank's operations and making savings on them.


The Bank, which has been providing investment banking services since its establishment, has obtained thepermission to accept deposits from BRSA's decision dated September 8, 2004 and numbered 1381, as a resultof the Bank's growth and investment policies in Turkey, This permission became into force after it waspublished in Official Gazette dated October 15, 2004 and numbered 25614 .

The main operations of the Bank are, Interbank Money Maket transactions, purchasing and selling marketablesecurities, foreign currency transactions and providing collateralized non-cash loans related with commercialactivities. After obtaining commercial banking licence, in addition to the Bank's current operations likecommercial banking and money market transactions, the Bank became structured to meet all of the needs ofits' customers by providing services such as accepting deposits, opening individual accounts and selling cashmanagement products and services, accordingly.

V. Other Informations

Title : Deutsche Bank AfiCenter Adress : Eski Büyükdere Cad. Tekfen Tower No:209

Kat:17-18 4. Levent 34394-‹STANBUL Phone number : (0212) 317 01 00Fax number : (0212) 317 01 05Webmail adress : www.deutsche-bank.com.trE-mail adress : [email protected] period : 1 January-31 December 2006



36

THOUSANDS OF NEW TURKISH LIRA (YTL)CURRENT PERIOD PRIOR PERIOD

31/12/2006 31/12/2005ASSETS Footnotes YTL FC Total YTL FC Total

I. CASH AND BALANCES WITH THE CENTRAL BANK (5.I.1) 42,507 68 42,575 1,138 65 1,203 II. FINANCIAL ASSETS AT FAIR VALUE THROUGH

PROFIT/LOSS (Net) (5.I.2) 680,032 911 680,943 157,582 6,396 163,978 2.1 Trading Securities 680,032 - 680,032 157,582 - 157,582 2.1.1 Government Debt Securities 680,032 - 680,032 157,582 - 157,582 2.1.2 Share Certificates - - - - - - 2.1.3 Other securities - - - - - - 2.2 Financial Assets at Fair Value through Profit/Loss - - - - - - 2.2.1 Government Debt Securities - - - - - - 2.2.2 Share Certificates - - - - - - 2.2.3 Other securities - - - - - - 2.3 Trading Derivative Instruments - 911 911 - 6,396 6,396 III. BANKS AND OTHER FINANCIAL INSTITUTIONS (5.I.3) 184 8,358 8,542 2,114 39,622 41,736 IV. MONEY MARKET PLACEMENTS 50,072 - 50,072 - - - 4.1 Interbank money market placements 50,072 - 50,072 - - - 4.2 Istanbul Stock Exchange money market placements - - - - - - 4.3 Receivables from reverse repurchase agreements - - - - - - V. INVESTMENT SECURITIES AVAILABLE

FOR SALE (Net) (5.I.4) - - - - - - 5.1 Share certificates - - - - - - 5.2 Government Debt Securities - - - - - - 5.3 Other securities - - - - - - VI. LOANS (5.I.5) 71,757 9,409 81,166 59,100 4,314 63,414 6.1 Loans 71,757 9,409 81,166 59,100 4,314 63,414 6.2 Loans under follow-up - - - - - - 6.3 Specific provisions (-) - - - - - - VII. FACTORING RECEIVABLES - - - - - - VIII. INVESTMENT SECURITIES HELD TO MATURITY (Net) (5.I.6) - - - - - - 8.1 Government bonds - - - - - - 8.2 Other securities - - - - - - IX. INVESTMENTS IN ASSOCIATES (Net) (5.I.7) - - - - - - 9.1 Consolidated according to Equity Method - - - - - - 9.2 Non-consolidated - - - - - - 9.2.1 Financial associates - - - - - - 9.2.2 Non-Financial associates - - - - - - X. INVESTMENTS IN SUBSIDIARIES (Net) (5.I.8) - - - - - - 10.1 Financial subsidiaries - - - - - - 10.2 Non-Financial subsidiaries - - - - - - XI. INVESTMENTS IN JOINT VENTURES (Net) (5.I.9) - - - - - - 11.1 Consolidated according to Equity Method - - - - - - 11.2 Non-consolidated - - - - - - 11.2.1 Financial Joint Ventures - - - - - - 11.2.2 Non-Financial Joint Ventures - - - - - - XII. FINANCIAL LEASE RECEIVABLES (Net) (5.I.10) - - - - - - 12.1 Financial Lease Receivables (Net) - - - - - - 12.2 Operational Lease Receivables - - - - - - 12.3 Other - - - - - - 12.4 Unearned Income (-) - - - - - - XIII. DERIVATIVE FINANCIAL INSTRUMENTS HELD FOR

RISK MANAGEMENT (5.I.11) - - - - - - 13.1 Fair value hedges - - - - - - 13.2 Cash flow hedges - - - - - - 13.3 Net foreign investment hedges - - - - - - XIV. TANGIBLE ASSETS (Net) (5.I.12) 4,312 - 4,312 3,965 - 3,965 XV. INTANGIBLE ASSETS (Net) (5.I.13) 163 - 163 - - - 15.1 Goodwill - - - - - - 15.2 Other intangibles 163 - 163 - - - XVI. TAX ASSET (5.I.14) 603 - 603 - - - 16.1 Current tax asset - - - - - - 16.2 Deferred tax asset 603 - 603 - - - XVII. ASSETS HELD FOR SALE (5.I.15) - - - - XVIII. OTHER ASSETS (5.I.16) 7,604 5,974 13,578 17,500 9,071 26,571

TOTAL ASSETS 857,234 24,720 881,954 241,399 59,468 300,867

The accompanying notes are an integral part of these financial statements.

Unconsolidated Financial Statements(Convenience Translation of Financial Statements Originally Issued in Turkish)DEUTSCHE BANK Afi Balance SheetAt 31 December 2006



31/12/2006 31/12/2005LIABILITIES AND SHAREHOLDERS' EQUITY Footnotes YTL FC TOTAL YTL FC TOTAL

I. DEPOSITS (5.II.1) 71,403 456,578 527,981 69,074 38,646 107,720 II. DERIVATIVE FINANCIAL LIABILITIES

HELD FOR TRADING (5.II.2) - 3,200 3,200 - 4,678 4,678 III. FUNDS BORROWED (5.II.3) - - - - - - IV. INTERBANK MONEY MARKET 135,310 - 135,310 2,182 - 2,182 4.1 Interbank money market takings - - - - - - 4.2 Istanbul Stock Exchange money market takings - - - - - - 4.3 Obligations under repurchase agreements 135,310 - 135,310 2,182 - 2,182 V. SECURITIES ISSUED (Net) - - - - - - 5.1 Bills - - - - - - 5.2 Asset backed securities - - - - - - 5.3 Bonds - - - - - - VI. FUNDS - - - - - - VII. MISCELLANEOUS PAYABLES 414 - 414 167 - 167 VIII. OTHER EXTERNAL RESOURCES PAYABLE (5.II.4) 1,277 148 1,425 508 19 527 IX. FACTORING PAYABLES - - - - - - X. LEASE PAYABLES (Net) (5.II.5) - 427 427 - - -10.1 Financial lease payables - 492 492 - 1 1 10.2 Operational lease payables - - - - 1 1 10.3 Others - - - - - - 10.4 Deferred expenses (-) - (65) (65) - - - XI. DERIVATIVE FINANCIAL LIABILITIES

HELD FOR RISK MANAGEMENT (5.II.6) - - - - - -11.1 Fair value hedges - - - - - - 11.2 Cash flow hedges - - - - - - 11.3 Net foreign investment hedges - - - - - - XII. PROVISIONS (5.II.7) 7,544 3,189 10,733 5,518 19,592 25,110 12.1 General provisions 671 - 671 638 - 638 12.2 Restructuring reserves - - - - - - 12.3 Reserve for employee benefits 167 - 167 81 - 81 12.4 Insurance technical provisions (Net) - - - - - - 12.5 Other provisions 6,706 3,189 9,895 4,799 19,592 24,391 XIV. TAX LIABILITY (5.II.8) 9,795 - 9,795 13,100 - 13,100 14.1 Current tax liability 9,795 - 9,795 12,733 - 12,733 14.2 Deferred tax liability - - - 367 - - XV. PAYABLES FOR ASSETS HELD FOR SALE (5.II.9) - - - - - - XIII. SUBORDINATED DEBTS (5.II.10) - - - - - - XVI. SHAREHOLDERS' EQUITY (5.II.11) 192,669 - 192,669 147,383 - 147,38316.1 Paid-in capital 30,000 - 30,000 20,000 - 20,000 16.2 Capital reserves 31,866 - 31,866 31,866 - 31,866 16.2.1 Share premium - - - - - - 16.2.2 Share cancellation profits - - - - - - 16.2.3 Securities value increase fund - - - - - - 16.2.4 Revaluation surplus on tangible assets - - - - - - 16.2.5 Revaluation surplus on intangible assets - - - - - - 16.2.6 Bonus shares of associates,

subsidiaries and joint-ventures - - - - - - 16.2.7 Hedging reserves (effective portion) - - - - - - 16.2.8 Revaluation surplus on assets held-for-sale - - - - - - 16.2.9 Other capital reserves 31,866 - 31,866 31,866 - 31,866 16.3 Profit reserves 85,517 - 85,517 70,750 - 70,750 16.3.1 Legal reserves 24,899 - 24,899 24,695 - 24,695 16.3.2 Status reserves - - - - - - 16.3.3 Extraordinary reserves 60,618 - 60,618 46,055 - 46,055 16.3.4 Other profit reserves - - - - - - 16.4 Profit or loss 45,286 - 45,286 24,767 - 24,767 16.4.1 Prior periods profit/loss - - - - - - 16.4.2 Current period profit/loss 45,286 - 45,286 24,767 - 24,767 16.5 Minority rights - - - - - -

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 418,412 463,542 881,954 237,932 62,935 300,867


(Convenience Translation of Financial Statements Originally Issued in Turkish)DEUTSCHE BANK AfiBalance SheetAt 31 December 2006

(Convenience Translation of Financial Statements Originally Issued in Turkish)DEUTSCHE BANK AfiIncome StatementFor the Year Ended 31 December 2006

38

THOUSAND OF NEW TURKISH LIRA (YTL)CURRENT PERIOD PRIOR PERIOD

INCOME AND EXPENSE ITEMS Footnotes 31/12/2006 31/12/2005

I. INTEREST INCOME (5.III.1) 42,107 15,546 1.1 Interest income from loans 12,735 5,352 1.2 Interest income from reserve deposits 2,471 91 1.3 Interest income from banks 982 1,296 1.4 Interest income from money market transactions 7,831 4,197 1.5 Interest income from securities portfolio 17,972 4,488 1.5.1 Trading financial assets 17,972 4,488 1.5.2 Financial assets valued at fair value through profit or loss - - 1.5.3 Financial assets available-for-sale - - 1.5.4 Investments held-to-maturity - - 1.6 Financial lease income - - 1.7 Other interest income 116 122 II. INTEREST EXPENSE (5.III.2) 117,245 80,830 2.1 Interest on deposits 21,373 5,569 2.2 Interest on funds borrowed 46,588 25,793 2.3 Interest on money market transactions - - 2.4 Interest on securities issued - - 2.5 Other interest expenses 49,284 49,468 III. NET INTEREST INCOME (I-II) (75,138) (65,284)IV. NET FEES AND COMMISSIONS INCOME 4,130 (8,869)4.1 Fees and commissions received 6,693 8,806 4.1.1 Cash loans - - 4.1.2 Non-cash loans 1,024 1,252 4.1.3 Others 5,669 7,554 4.2 Fees and commissions paid 2,563 17,675 4.2.1 Cash loans 78 42 4.2.2 Non-cash loans - 7 4.2.3 Others 2,485 17,626 V. DIVIDEND INCOME - - 5.1 Al›m Sat›m Amaçl› Menkul De¤erlerden - - 5.2 Sat›lmaya Haz›r Menkul De¤erlerden - - VI. NET TRADING INCOME/LOSSES (Net) 139,165 138,144 6.1 Trading account income/losses (Net) 135,938 131,617 6.2 Foreign exchange gains/losses (Net) 3,227 6,527 VII. OTHER OPERATING INCOME (5.III.4) 27,819 3,043 VIII. TOTAL OPERATING PROFIT (III+IV+V+VI+VII) 95,976 67,034 IX. PROVISION FOR LOSSES ON LOANS AND

OTHER RECEIVABLES (-) (5.III.5) 534 385 X. OTHER OPERATING EXPENSES (-) (5.III.6) 41,331 30,580 XI. NET OPERATING PROFIT/LOSS (VIII-IX-X) 54,111 36,069 XII. INCOME RESULTED FROM MERGERS (5.III.7) - - XIII. INCOME/LOSS FROM INVESTMENTS

UNDER EQUITY ACCOUNTING - - XIV. GAIN/LOSS ON NET MONETARY POSITION - - XV. PROFIT/LOSS BEFORE TAXES (XI+XII+XIII+XIV) 54,111 36,069 XVI. PROVISION FOR TAXES 8,825 11,31015.1 Current tax charge 9,795 12,733 15.2 Deferred tax charge/(credit) (970) (1,423)XVII. NET OPERATING PROFIT/LOSS AFTER TAXES (XV-XVI) 45,286 24,759 17.1 Discontinued operations - - 17.2 Others 45,286 24,759 XVII. VERG‹ SONRASI OLA⁄ANÜSTÜ KÂR/ZARAR - 8 17.1 Vergi Öncesi Ola¤anüstü Net Kâr/Zarar - 8 17.1.1 Ola¤anüstü Gelirler - 8 17.1.2 Ola¤anüstü Giderler (-) - - 17.2 Ola¤anüstü Kâra ‹liflkin Vergi Karfl›l›¤› (-) - - XVIII. NET PROFIT/LOSS (XV-XVI) (5.III.9) 45,286 24,767 18.1 Group Profit / Loss 45,286 24,767 18.2 Minority Rights Profit / Loss (-) - -

EARNINGS PER SHARE (full YTL amount)




31/12/2006 31/12/2005OFF-BALANCE SHEET ITEMS Footnotes YTL FC TOTAL YTL FC TOTAL

A. OFF-BALANCE SHEET COMMITMENTS AND CONTINGENCIES (I+II+III) 577,815 1,077,784 1,655,599 411,413 1,210,874 1,622,287

I. GUARANTEES AND SURETIES (5.V.5) 1,834 198,441 200,275 857 99,883 100,7401.1. Letters of guarantee (5.V.1) 1,834 127,847 129,681 857 43,263 44,1201.1.1. Guarantees subject to State Tender Law - - - - - - 1.1.2. Guarantees given for foreign trade operations - - - - - - 1.1.3. Other letters of guarantee 1,834 127,847 129,681 857 43,263 44,1201.2. Bank acceptances - - - - - - 1.2.1. Import letter of acceptance - - - - - - 1.2.2. Other bank acceptances - - - - - - 1.3. Letters of credit - 29,257 29,257 - 5,400 5,4001.3.1. Documentary letters of credit - 29,257 29,257 - 5,400 5,4001.3.2. Other letters of credit - - - - - - 1.4. Guaranteed prefinancings - - - - - - 1.5. Endorsements - - - - - - 1.5.1. Endorsements to the Central Bank of Turkey - - - - - - 1.5.2. Other endorsements - - - - - - 1.6. Underwriting commitments - - - - - - 1.7. Factoring related guarantees - - - - - - 1.8. Other guarantees - - - - - - 1.9. Other sureties - 41,337 41,337 - 51,220 51,220II. COMMITMENTS (5.V.5) - - - 11,449 - 11,449 2.1. Irrevocable commitments (5.V.1) - - - 11,449 - 11,449 2.1.1. Asset purchase commitments - - - 11,370 - 11,370 2.1.2. Deposit purchase and sales commitments - - - - - - 2.1.3. Share capital commitments to associates and subsidiaries - - - - - - 2.1.4. Loan granting commitments - - - - - - 2.1.5. Securities issuance brokerage commitments - - - - - - 2.1.6. Commitments for reserve deposit requirements - - - - - - 2.1.7. Commitments for cheque payments - - - - - - 2.1.8. Tax and fund obligations on export commitments - - - 79 - 79 2.1.9. Commitments for credit card limits - - - - - - 2.1.10. Receivables from "short" sale commitments on securities - - - - - - 2.1.11. Payables from "short" sale commitments on securities - - - - - - 2.1.12. Other irrevocable commitments - - - - - - 2.2. Revocable commitments - - - - - - 2.2.1. Revocable loan granting commitments - - - - - - 2.2.2. Other revocable commitments - - - - - - III. DERIVATIVE FINANCIAL INSTRUMENTS (5.V.2) 575,981 879,343 1,455,324 399,107 1,110,991 1,510,098 3.1 Derivative financial instruments held for risk management - - - - - - 3.1.1 Fair value hedges - - - - - - 3.1.2 Cash flow hedges - - - - - - 3.1.3 Net foreign investment hedges - - - - - - 3.2 Trading derivatives - - - - - - 3.2.1 Forward foreign currency purchases/sales 210,981 436,456 647,437 243,607 841,904 1,085,511 3.1.1. Forward foreign currency purchases 92,388 231,655 324,043 210,019 334,287 544,3063.1.2. Forward foreign currency sales 118,593 204,801 323,394 33,588 507,617 541,2053.2.2 Currency and interest rate swaps 365,000 442,335 807,335 155,500 205,695 361,1953.2.2.1 Currency swaps-purchases - 402,066 767,066 - 180,198 335,6983.2.2.2 Currency swaps-sales 365,000 40,269 405,269 155,500 25,497 180,9973.2.2.3 Interest rate swaps-purchases - - - - - - 3.2.2.4 Interest rate swaps-sales - - - - - - 3.2.3 Currency, interest rate and security options - - - - - - 3.2.3.1 Currency call options - - - - - - 3.2.3.2 Currency put options - - - - - - 3.2.3.3 Interest rate call options - - - - - - 3.2.3.4 Interest rate put options - - - - - - 3.2.3.5 Security call options - - - - - - 3.2.3.6 Security put options - - - - - - 3.2.4 Currency futures - 552 552 - 63,392 63,392 3.2.4.1 Currency futures-purchases - 276 276 - 31,696 31,696 3.2.4.2 Currency futures-sales - 276 276 - 31,696 31,696 3.2.5 Interest rate futures - - - - - - 3.2.5.1 Interest rate futures-purchases - - - - - - 3.2.5.2 Interest rate futures-sales - - - - - - 3.2.6 Others - - - - - - B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 1,645,415 - 1,645,415 6,682,352 - 6,682,352IV. ITEMS HELD IN CUSTODY 1,645,415 - 1,645,415 6,682,352 - 6,682,3524.1. Customers' securities held 931,257 - 931,257 6,580,656 - 6,580,6564.2. Investment securities held in custody 714,158 - 714,158 101,696 - 101,6964.3. Checks received for collection - - - - - - 4.4. Commercial notes received for collection - - - - - - 4.5. Other assets received for collection - - - - - - 4.6. Assets received through public offering - - - - - - 4.7. Other items under custody - - - - - - 4.8. Custodians - - - - - - V. PLEDGED ITEMS - - - - - - 5.1. Securities - - - - - - 5.2. Guarantee notes - - - - - - 5.3. Commodities - - - - - - 5.4. Warranties - - - - - - 5.5. Real estates - - - - - - 5.6. Other pledged items - - - - - - 5.7. Pledged items-depository - - - - - - VI. CONFIRMED BILLS OF EXCHANGE AND SURETIES - - - - - -

TOTAL OFF-BALANCE SHEET ITEMS (A+B) 2,223,230 1,077,784 3,301,014 7,093,765 1,210,874 8,304,639

(Convenience Translation of Financial Statements Originally Issued in Turkish)DEUTSCHE BANK AfiOff-Balance Sheet ItemsAt 31 December 2006

(Convenience Translation of Financial Statements Originally Issued in Turkish)DEUTSCHE BANK Afi CHANGES IN SHAREHOLDERS' EQUITYFor the Year Ended 31 December 2006

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THOUSANDS OF NEW TURKISH LIRACURRENT PERIOD PRIOR PERIOD

Footnotes 31/12/2006 31/12/2005

A. CASH FLOWS FROM BANKING OPERATIONS

1.1 Operating profit before changes in operating assets and liabilities (89,952) (100,251)

1.1.1 Interests received 26,109 21,562 1.1.2 Interests paid (118,179) (81,202) 1.1.3 Dividend received - - 1.1.4 Fees and commissions received 6,693 8,806 1.1.5 Other income 32,397 3,043 1.1.6 Collections from previously written-off loans and other receivables - - 1.1.7 Payments to personnel and service suppliers (33,861) (22,631) 1.1.8 Taxes paid (4,095) (31,870) 1.1.9 Others 1 984 2,041

1.2 Changes in operating assets and liabilities 10,263 (5,381)

1.2.1 Net (increase) decrease in financial assets held for trading (499,253) 143,050 1.2.2 Net (increase) decrease in financial assets valued at fair value through profit or loss - - 1.2.3 Net (increase) decrease in due from banks and other financial institutions (16,825) (51,634) 1.2.4 Net (increase) decrease in loans (3,004) 1,630 1.2.5 Net (increase) decrease in other assets 385,053 66,636 1.2.6 Net increase (decrease) in bank deposits 34,867 26,773 1.2.8 Net increase (decrease) in funds borrowed - - 1.2.9 Net increase (decrease) in matured payables - - 1.2.10 Net increase (decrease) in other liabilities 1 109,425 (191,836)

I. Net cash flow from banking operations (79,689) (105,632)

B. CASH FLOWS FROM INVESTING ACTIVITIES

II. Net cash flow from investing activities (2,133) (2,799)

2.1 Cash paid for purchase of associates, subsidiaries and joint-ventures 2 - - 2.2 Cash obtained from sale of associates, subsidiaries and joint-ventures 3 - - 2.3 Purchases of tangible assets (2,133) (3,807) 2.4 Sales of tangible assets - 1,008 2.5 Cash paid for purchase of financial assets available-for-sale - - 2.6 Cash obtained from sale of financial assets available-for-sale - - 2.7 Cash paid for purchase of investments held-to-maturity - - 2.8 Cash obtained from sale of investments held-to-maturity - - 2.9 Others - -

C. CASH FLOWS FROM FINANCING ACTIVITIES

III. Net cash flow from financing activities 135,938 129,117

3.1 Cash obtained from funds borrowed and securities issued - - 3.2 Cash used for repayment of funds borrowed and securities issued - - 3.3 Equity instruments issued - - 3.4 Dividends paid - (2,500) 3.5 Payments for financial leases - - 3.6 Extraordinary items - - 3.7 Others 1 135,938 131,617

IV. Effect of change in foreign exchange rate on cash and cash equivalents 1 3,227 6,527

V. Net (decrease)/increase in cash and cash equivalents (I+II+III+IV) 57,343 27,213

VI. Cash and cash equivalents at beginning of period 4 42,902 15,689

VII. Cash and cash equivalents at end of period (V+VI) 5 100,245 42,902


(Convenience Translation of Financial Statements Originally Issued in Turkish)

DEUTSCHE BANK AfiStatement of Cash Flows

(Convenience Translation of Financial Statements Originally Issued in Turkish)

DEUTSCHE BANK AfiSTATEMENT OF PROFIT DISTRIBUTION

42


31/12/2006 31/12/2005

I. DISTRIBUTION OF CURRENT YEAR PROFIT - -

1.1 CURRENT PERIOD PROFIT 54,111 36,0771.2 TAXES AND LEGAL DUTIES PAYABLE (-) 8,825 11,3101.2.1 Corporate tax (income tax) 8,825 11,3101.2.2 Withholding tax - -1.2.3 Other taxes and duties - -

A. NET PROFIT FOR THE PERIOD (1.1-1.2) 45,286 24,767

1.3 ACCUMULATED LOSSES (-) - -1.4 FIRST LEGAL RESERVES (-) - 2041.5 OTHER STATUTORY RESERVES (-) - -

B. NET PROFIT AVAILABLE FOR DISTRIBUTION [(A-(1.3+1.4+1.5)] - 24,563

1.6 FIRST DIVIDEND TO SHAREHOLDERS (-) - - 1.6.1 To owners of ordinary shares - - 1.6.2 To owners of privileged shares - - 1.6.3 To owners of redeemed shares - - 1.6.4 To profit sharing bonds - - 1.6.5 To holders of profit and loss sharing certificates - -1.7 DIVIDENDS TO PERSONNEL (-) - - 1.8 DIVIDENDS TO BOARD OF DIRECTORS (-) - - 1.9 SECOND DIVIDEND TO SHAREHOLDERS (-) - - 1.9.1 To owners of ordinary shares - - 1.9.2 To owners of privileged shares - - 1.9.3 To owners of redeeemed shares - - 1.9.4 To profit sharing bonds - - 1.9.5 To holders of profit and loss sharing certificates - -1.10 SECOND LEGAL RESERVES (-) - - 1.11 STATUS RESERVES (-) - - 1.12 EXTRAORDINARY RESERVES - 24,5631.13 OTHER RESERVES - - 1.14 SPECIAL FUNDS - -

II. DISTRIBUTION OF RESERVES - -

2.1 APPROPRIATED RESERVES - - 2.2 SECOND LEGAL RESERVES (-) - - 2.3 DIVIDENDS TO SHAREHOLDERS (-) - - 2.3.1 To owners of ordinary shares - - 2.3.2 To owners of privileged shares - - 2.3.3 To owners of redeemed shares - - 2.3.4 To profit sharing bonds - - 2.3.5 To holders of profit and loss sharing certificates - - 2.4 DIVIDENDS TO PERSONNEL (-) - - 2.5 DIVIDENDS TO BOARD OF DIRECTORS (-) - -

III. EARNINGS PER SHARE - -

3.1 TO OWNERS OF ORDINARY SHARES (YTL Full) - 123,8353.2 TO OWNERS OF ORDINARY SHARES (%) - 6%3.3 TO OWNERS OF PRIVILEGED SHARES - - 3.4 TO OWNERS OF PRIVILEGED SHARES (%) - -

IV. DIVIDEND PER SHARE - -

4.1 TO OWNERS OF ORDINARY SHARES - - 4.2 TO OWNERS OF ORDINARY SHARES (%) - - 4.3 TO OWNERS OF PRIVILEGED SHARES - - 4.4 TO OWNERS OF PRIVILEGED SHARES (%) - -


SECTION THREEAccounting policies

I. Basis of presentationAdditional paragraph for convenience translation to English

The differences between accounting principles, as described in the following paragraphs, and the accounting

principles generally accepted in countries, in which the accompanying financial statements are to be distributed,

and International Financial Reporting Standards (“IFRS”), may have significant influence on the accompanying

financial statements. Accordingly, the accompanying financial statements are not intended to present the financial

position and results of operations in accordance with the accounting principles generally accepted in such countries

and IFRS.

I.a Disclosures on the preparation of financial statements and its explanatory notes in accordance with theTurkish Accounting Standards and the Regulation on Accounting Applications for Banks and Safeguardingof Documents

The unconsolidated financial statements are prepared in accordance with the decree “Regulation on Accounting

Applications for Banks and Safeguarding of Documents” as described in Turkish Banking Law No 5411 and has

been published in the Official Gazette No 26333 dated November 1, 2006, Turkish Accounting Standards (“TAS”)

promulgated by Turkish Accounting Standards Association (“TASA”), Turkish Financial Reporting Standards

(“TFRS”) and its related statements and interpretations. The Bank keeps its statutory accounting records in Turkish

Lira in accordance with the Turkish banking Law, Turkish Commercial Law and the Turkish Tax Law.

The accompanying unconsolidated financial statements are prepared in YTL and in accordance with the historical

cost basis except for the financial assets and liabilities, which are presented on a fair value basis.

Unless stated otherwise, the accompanying unconsolidated financial statements and the explanatory notes are

presented in thousands of New Turkish Lira (TRY).

1.b Disclosures for the first-time adoption of Turkish Accounting Standards:

The Bank prepared its financial statements in accordance with TAS for the first time in December 31, 2006. In

accordance with 'Turkish Financial Reporting Standards on the first time adoption of the TFRS' (“TFRS 1”), the

transition date to TAS is January 1, 2005, and the following restatements are made to December 31, 2005 financial

statements and to the earliest period presented as comparative to the financial statements as of December 31,

2006. In this respect there aren't any restatement effects of TAS and TFRS adoption reflected on the financial

statements as of December 31, 2005.

1.c Accounting policies and measurement principles

The accounting policies and the measurement principles applied during the preparation of the financial statements

are in compliance with TAS. The subject accounting policies and measurement principles are explained between

the following explanatory notes numbered II and XXI.





44

1.d Presentation of the financial statements according to the current purchasing power of the money

The Bank's unconsolidated financial statements have been prepared in accordance with TAS 29 “Reporting in

Hyperinflationary Economies” until December 31, 2004. It was announced by BRSA on April 28, 2005, that the

indicators of the requirement for the inflation accounting were not exist any more and therefore the inflation

accounting application had been ceased and would not be applied starting from January 1, 2005.

II. Strategy for the use of financial instruments and foreign currency transactions

The main operations of the Bank are, Interbank Money Maket transactions, purchasing and selling marketable

securities, foreign currency transactions and providing collateralized cash and non-cash loans.

The major funding resources of the Bank are its sharecapital and overnight borrowings from domestic and foreign

financial institutions. The Bank's assets are mainly consist of overnight money market transactions and trading

securities portfolio. Therefore the Bank provides high earnings while taking low risk.

The Bank is following an effective asset-liability strategy by holding marketable securities with strong demand on

the market and overnight interbank money market instruments at its assets which secures the liquidity structure

of the Bank to meet all maturing liabilities. For long-term placements and cash-loans, the Bank has high-yield

strategy .

The purchasing and selling of the capital market instruments are the main activity of the Bank, that generates

earnings over the average earnings of all of the operation segments of the Bank.

The off balance sheet items are mostly comprised of forward foreign currency purchases/sales transactions and

letter of guarantees extended against cash borrowings from foreign financial institutions.

Foreign currency risk, interest rate risk and liquidity risk are measured daily and the asset-liability management is

performed within the internal risk limits and legal limits by using the value at risk calculations and stress testings.

The Bank does not have any foreign currency available for sale financial instruments .

The Bank does not have any investments in foreign associates.

III. Forward, options and other derivative transactions

In accordance with on the standard “Financial Instruments: Recognition and Measurement”; the forward foreign

currency purchase/sales transactions and swap transactions, which are not considered as hedging instruments, are

classified as trading derivative instruments.

The fair values of the trading forward foreign currency purchase/sales transactions are measured with the internal

pricing models by taking the expectations from the market into account. The change in the fair values are recorded

through the period's profit or loss.


The Bank records the spot legs of its currency swap transactions either on its balance sheet accounts or on its off

balance sheet accounts together with its forward currency transactions by taking the maturity dates of those

transactions.

The fair values of the trading swap transactions are measured with the internal pricing models by taking the

expectations from the market into account. The change in the fair values are recorded through the period's profit

or loss.

The Bank does not have any derivative financial instruments designated as hedging instruments or embedded

derivative financial instruments.

The Bank measures its forward purchase/sales agreements based on marketable securities at fair value and records

the changes in the fair values through the period's profit or loss.

IV. Interest income and expenses

Interest income and expense are recorded on an accrual basis using the effective interest rate method. Foreign

exchange gains from foreign currency indexed loans and marketable securities are recorded to “other non-interest

income”, foreign exchange losses are recorded as “other expenses”. The accrued interest income on non-

performing loans are reversed and subsequently recognised as income only when collected.

V. Fees and commissions

Commission and fee income for various banking services are booked in the period of collection and other income

and expense items are booked on accrual basis.

VI. Financial assets

Financial instruments consist of financial assets, financial liabilities and derivative instruments. Financial

instruments are the basis of the commercial activities and the operations of the Bank. The Bank performs the

purchase and sales of those financial instruments on behalf of its own and its customers.

Financial assets constitute mainly the commercial activities and operations of the Bank. These instruments have

features that expose, affect and decrease the liquidity, credit and interest rate risks on the financial statements.

The purchase and sale transactions of those financial assets are recognized and derecognized according to their

“Delivery dates”. Delivery date is the date at which, a financial asset is delivered to the Bank or delivered by the

Bank. Delivery date accounting requires, (a) recognition of financial asset at the date the entity obtains the financial

asset, and (b) derecognition of financial asset from the balance sheet at the date of delivery of the financial asset

by the entity and as at the same date accounting of gain or loss from the sale of the financial asset. If delivery date

accounting is applied, the entity records the changes in the fair value of the financial asset between the transaction

date and the delivery date.





46

The ordinary purchase or sale of financial asset is the purchase or sale of financial asset under a contractual

aggrement that requires the delivery of financial asset in a certain time period generally determined according to

the framework of legal regulations and market principles. Changes in the fair value of the financial asset that will

be obtained between the transaction date and the delivery date, is recorded in the same way of the recordings of

the assets purchased. The changes in the market value of the financial assets, which are measured with its

historical or amortized cost, are not recognized. The changes in the fair values of the financial assets held for trading

are recognized through profit or loss and the fair value changes of the available for sale financial instruments are

recognized in the equity.

The methods and assumptions used to determine the fair values of each financial instruments are explained as

follows.

Cash and Cash Equivalents, Banks and Other Financial Institutions:

Cash and cash equivalents comprised of cash on hand, demand deposits, investments which have original

maturities equal and less than three months and the investments that are highly liquid or easily convertible to cash

and have risk of fair value changes in insignificant amounts .The carrying value of these items are equal to their fair

value.

Marketable Securities:

Marketable securities are classified under three main categories on the balance sheet of the Bank. These

categorieas are “Financial assets at fair value through profit or loss”, “Investment securities held-to-maturity” and

“Investment securities available for sale”.

Financial assets at fair value through profit or loss: These transactions are classified under two main categories. (i)

Financial assets held for trading purposes are the instruments which are acquired for in order to sell them or

purchase them back to provide short term profit. (ii) The Bank classified these instruments as financial assets at fair

value through profit or loss at the initial recognition of these instruments. The Bank can use this classification when

it is permitted or when this classification provides more accurate information.

The financial instruments recorded under this group are recognized at their cost and measured with their fair values

on the financial statements. The market value of the financial instruments that are quoted to stock exchange

represents the fair value of those instruments.

The difference between the cost values and fair values of the financial assets at fair value through profit or loss, is

recorded as accrued interest income or allowance for the impairment loss on the value of the securities. Interests

earned through the holding of the financial assets at fair value through profit or loss are recorded as interest income

and bonus shares earned through the holding of financial assets at fair value through profit or loss is recorded as

dividend income.

As of December 31, 2006 and December 31, 2005 the Bank does not have any investment securities held-to-

maturity , investment securities available for sale


Loans:

Loans are financial assets which are not traded in an active market and have constant or determinable payments.

Loans are accounted at their cost values, and measured at their amortized cost with the effective interest method.

Fees, commissions and other payments regarding the assets taken as collaterals against the extended loans are

considered as a part of the transaction costs and reflected to the customer.

Cash loans in Turkish Lira are comprised of the foreign currency indexed loans, export guaranteed loans, fund

resourced loans and cash loans in foreign currency are comprised of the export loans and operating loans.

Foreign currency indexed loans are followed under the YTL accounts by translating its original amount to YTL by

using the historical foreign exchange rate of its opening date. Repayments are calculated with the foreign exchange

rate at the payment date and the incurred foreign exchange gains/ losses are recorded through the period's profit

or loss.

If there is an objective evidence that certain loans will not be collected; the Bank classifies those loan amounts to

the groups as determined by the related regulations and provides specific provisions for them, accordingly. The

provisions are recorded through the related period's profit or loss. The collections of the non performing loans are

recorded under the “Interest income from the non performing loans”.

The released provision is reversed from the current period's addition and the rest is recorded as other income.

VII. Impairment of financial assets

Financial asset or group of financial assets are reviewed at each balance sheet date to determine whether there is

objective evidence of impairment. If any such indication exists, the Bank estimates the amount of impairment.

Impairment losses occurs if, and only if, there is an objective evidence that the expected future cash flows of

financial asset or group of financial assets are adversely effected by an event(s) (“loss event(s)”) incurred

subsequent to recognition. The losses expected to incur due to future events are not recognized even if the

probability of loss is high.

VIII. Netting of financial instruments

The Bank provides allowance for the impairment losses on the financial assets at fair value through profit or loss,

when the fair values are less than their carrying values. This allowance is netted from the carrying value of the

related financial assets group on the balance sheet.

Bank provides specific provisions for loans and other receivables in accordance with the related regulations. This

allowance is netted from the carrying value of the loans and receivables on the asset side of the balance sheet.

Except for the matters explained above, the financial assets and liabilities can only be netted off when there is a

contractual right.





48

IX. Repurchase and resale agreements and securities lending

Treasury bills and bonds that have been sold to the customers under the repurchase agreements are classified as

“Subject to Repurchase Agreements” and, in accordance with the intention of the Bank for holding such securities,

they are measured either at their fair value or amortized cost by using the effective interest (internal rate of return)

method. The obligations under repurchase agreements are recorded under a seperate account on the liability side

of the balance sheet and its accrued interest expense is recorded on the financial statements.

Marketable securities subject to resale agreements (“reverse repurchase agreements”) are presented under a

seperate account of ”Money Market Placements”. Income accrual is calculated for the difference between the

purchase price and resale prices of the markatable securities, that has impact on the current period.

The Bank does not have any resale agreements as of December 31, 2006.

X. Assets held for sale and discontinued operations

The Bank does not have any assets held for sale as ofDecember 31, 2006 and 2005.

XI. Goodwill and other intangible assets

There isn't any goodwill on the accompanying unconsolidated financial statements as of December 31, 2006.

The intangible assets are amortized over their useful lives on a straight line basis. The amortisation method and the

useful lives of the intangible assets are reassessed regularly at each year end. The intangible assets are mainly

comprised of “rights” and are amortized over 5 years.

XII. Tangible assets

The historical costs of the tangible assets are restated to reflect the purchasing power of the money at December

31, 2004.

The restated costs of the tangible assets are depreciated over their estimated useful lives on a straight-line basis.

If the recoverable amounts of the tangible assets are less than their restated net book values, the Bank records

provisions for the impairment losses on the tangible assets in accordance with the prudence and the materiality

principles.

Gains and losses arising from the disposal of the tangible assets are calculated as the difference between the

restated net book value and the net sales price and recorded to the income statement under “other income” or

“other expense”. Gains arising from the disposal of the tangible assets can also be recorded under a seperate fund

in the equity. .

Ordinary repair and maintenance expenses are recorded on the income statement.




There are no restrictions such as pledges, mortgages or any other restrictions on the tangible assets as of

December 31, 2006.

There aren't any changes in the accounting estimates that would have significant effects in the current period or in

the following periods.

Depreciation rates and the estimated useful lives of tangible assets are as follows:

Tangible assets Estimated useful lives (year) Depreciation rate (%))Motor vehicles 4-5 20-25

Other tangible assets 3-5 20-33

Tangible assets which are acquired before January 1, 2005, carried at restated cost for the effects of inflation in

YTL units as of December 31, 2004 current at the balance sheet date. Tangible assets acquired in the following

periods are carried at historical cost less accumulated depreciation and permanent impairment losses.

Tangible assets are depreciated on a straight line basis and the useful lives are determined in accordance with the

Turkish Tax Law.

XIII. Leasing activities

Maximum length of the finance lease contracts is 4 years. The leased assets are classified under tangible assets

and depreciated over their useful lives with the rate of 20%. The payables related with those finance lease

agreements are recorded under “Lease payables” on the liability side of the balance sheet. The incurred interest

expenses and foreign exchange differences are recorded through the income statement.

In the event of the annulment of the operational lease contracts before its expiration date, the cash paid penalties

are recognized as expense in the related period. There are not any operational lease contracts which are annulled

by the Bank before its expiration date.

The Bank does not perform any finance lease transactions as lessor.

XIV. Provisions and contingent liabilities.

In the financial statements, a provision is made for an existing commitment resulted from past events if it is

probable that the commitment will be settled and a reliable estimate can be made of the amount of the obligation.

If the amount of the contingent liability is reliably measurable and the probability of its occurance is high then a

provision is made on the financial statements. If the amount of the contingent liability is not reliably estimated and

there is no probability of cash outflow from the Bank to settle the liability, the related liability is considered as

“contingent” and disclosed in the notes to the financial statements.



50

XV. Obligations of the Bank concerning employee rights

As per the existing labour law in Turkey, the Bank is required to pay certain amounts to the employees retired or

fired except for resignation or misbehaviours. The Bank reserved for employee severance indemnities in the

accompanying financial statements by discounting the estimated liability to its present value as of the balance sheet

date.

XVI. Taxation

Corporate Tax

Income tax is comprised of current tax and deferred tax expenses.

Current year tax obligation is calculated over taxable portion of profit for the period. The taxable profit excludes the

prior year's income or expense items, which are tax deductable or taxable, or which are neither tax deductable nor

taxable. Therefore the taxable profit is not the same as the profit for the period shown on the face of the income

statement. The current tax liability of the Bank is calculated over the legal taxe rate enacted as of the balance sheet

date.

The deferred tax asset or liability is comprised of the tax effects of the temporary differences between the assets

and liabilities shown on the face of the balance sheet and the tax balance sheet. The tax effects are calculated by

using the balance sheet method and applying the legal tax rate enacted at the balance sheet date. The deferred tax

liabilities are calculated for all taxable temporary differences, while deferred tax assets consisting of deductible

temporary differences are calculated on the condition that utilizing these differences are presumable by making

profit subject to tax in the future. Except for the goodwill and business combinations, deferred tax asset or liability

is not calculated for the temporary differences arising from the recognition of the assets and liabilities on the

financial statements for the first time and which do not have any effect on the fiscal and financial income or

expense.

Carrying value of deferred tax asset is reviewed at each balance sheet date. If it is not probable to make enough

financial income to utilize from all or a portion of deferred tax assets' benefit, the carrying value of the deferred tax

asset is reduced, accordingly.

The deferred taxes are computed at the tax rate, which is valid at the time that assets and liabilities have been

occurred and recorded as revenue/expense to the income statement. In addition, if transactions and events are

recorded directly in the shareholders' equity, the related deferred tax effects are also recognized directly in the

shareholders' equity.

The prepaid taxes can be deducted from the annual corporate tax calculated for the whole year earnings. The

deferred tax liabilities and assets are netted from each other.

The Bank recorded the restatements made in accordance with inflation accounting to its statutory accounts in

compliance with the 5024 numbered article of Turkish Corporate Tax Law.


XVII. Borrowings

Bank borrows funds from domestic or foreign institutions when needed. The related transactions are recorded at

their historical cost on the transaction date and subsequently measured at their amortised costs.

There are no convertible bonds or any other securities issued.

XVIII. Shares and share issuances

None.

XIX. Guarantees and acceptances

None

XX. Government incentives

None.

XXI. Segment Reporting

The main operations of the Bank are, Interbank Money Maket transactions, purchasing and selling marketable

securities, foreign currency transactions and providing collateralized non-cash loans. After obtaining commercial

banking licence, in addition to the Bank's current operations like commercial banking and money market

transactions, the Bank became structured to meet all of the needs of its' customers by providing services such as

accepting deposits, opening individual accounts and selling cash management products and services, accordingly.





52

SECTION FOURFinancial position and results of operations

I. Capital Adequacy Ratio

As of December 31, 2006 and 2005 the Bank's capital adequacy ratios are 71.32%and 112.35%, respectively.

1. Risk measurement methods in calculation of capital adequacy ratio

Capital adequacy ratio is calculated in accordance with the “Regulation on Measurement and Assessment of CapitalAdequacy Ratios of Banks” published on the Official Gazette numbered 26333 and dated November 1, 2006 andthe regulations on the calculation of the market risk. The Bank uses “standard method” to calculate the market risk.

2. Capital adequacy ratio

Risk WeightsValue at Credit Risk 0% 20% 50% 100%Balance Sheet Items (Net) 102,514 9,759 - 87,832Cash on Hand - - - -Securities in Redemption - - - -Balances with the Central Bank of Turkey 42,575 - - -Domestic and Foreign Banks, Foreign

Head offices and Branches - 3,472 - -Money Market Placements 50,072 - - -Receivables from Reverse Repurchase Agreements - - - -Reserve Deposits 5,070 - - -Loans - 600 - 80,566Loans under Follow-Up (Net) - - - -Lease Receivables - - - -Investment Securities Available-for-Sale - - - -Investment Securities Held-to-Maturity - - - -Receivables from Term Sale of Assets - - - -Miscellaneous Receivables - - - 1,853Accrued Interest and Income(*) - - - -Tangible Assets (Net) - - - 2,960Other Assets 5,181 5,687 - 2,490Off-Balance Sheet Items 86,778 55,017 21,028 21,455Non-Cash Loans and Commitments 86,778 53,620 21,028 20,668Derivative Financial Instruments - 1,397 - 787

Total Risk Sensitive Assets 189,292 64,776 21,028 109,287

Total Risk-Weighted Assets - 12,955 10,514 109,287

(*) “Accrued Interest and Income” is not presented seperately on the face of the balance sheet and included in therelated accounts.


3. Summary information related to the unconsolidated capital adequacy ratio

Current Period Prior PeriodValue at Credit Risk (VaCR) 132,756 99,650

Value at Market Risk (VaMR) 134,538 30,688

Value at Operational Risk (VaOR) - -

Shareholders' Equity 190,618 146,429

Shareholders' Equity/ (VaCR+VaMR+VaOR)*100 71.32% 112.35%

4. Components of shareholders' equity items

Current Period Prior PeriodCORE CAPITALPaid-in Capital 30,000 20,000

Nominal Capital 30,000 20,000

Capital Commitments (-) - -

Capital Reserves from Inflation Adjustments to Paid-in Capital 31,866 31,866

Share Premium - -

Share Cancellation Profits - -

Legal Reserves 24,899 24,695

I. Legal Reserve (Turkish Commercial Code 466/1) 9,533 9,328

II. Legal Reserve (Turkish Commercial Code 466/2) 15,367 15,367

Reserves allocated as per Special Legislations - -

Status Reserves - -

Extraordinary Reserves 60,618 46,055

Reserve allocated as per the Decision held by the General Assembly 60,618 46,055

Retained Earnings - -

Accumulated Losses - -

Exchange Rate Differences on Foreign Currency Capital - -

Reserves from Inflation Adjustments to Legal, Status and Extraordinary Reserves - -

Profit 45,286 24,767

Current Period Profit 45,286 24,767

Prior Periods Profit - -

Provision for Possible Losses (upto 25%of Core Capital) - -

Income on Sale of Equity Shares and Real Estates to be used up for Capital Increase - -

Primary Subordinated Debt (upto 15%of Core Capital) - -

Loss excess of Reserves (-) - -

Current Period Loss - -

Prior Periods Loss - -

Leasehold Improvements (-) 1,352 1,306

Prepaid Expenses (-) 1,207 286

Intangible Assets (-) 163 -

Deferred Tax Asset excess of 10%of Core Capital (-) - -

Limit excesses as per the 3rd Paragraph of the Article 56 of the Banking Law (-) - -

Total Core Capital 189,947 145,791





54

Current Period Prior PeriodSUPPLEMENTARY CAPITALGeneral Provisions 671 638

45%of Revaluation Surplus on Movables - -

45%of Revaluation Surplus on Immovables - -

Bonus shares of Associates, Subsidiaries and Joint-Ventures - -

Hedging Reserves (effective portion) - -

Primary Subordinated Debt excluding the Portion included in Core Capital - -

45%of Securities Value Increase Fund - -

Associates and Subsidiaries - -

Investment Securities Available for Sale - -

Other Profit Reserves - -

Total Supplemantary CapitalTIER III CAPITAL - -CAPITAL 190,618 146,429DEDUCTIONS FROM CAPITALUnconsolidated investments in Entities (domestic/foreign) operating in Banking

and Financial Sectors at 10%or more - -

Investments in Entities (domestic/foreign) operating in Banking and Financial Sectors at

less than 10%exceeding 10%or more of the Total Core and Supplementary Capitals - -

Loans to Banks, Financial Institutions (domestic/foreign) or Qualified Shareholders in

the form of Secondary Subordinated Debts and Debt Instruments purchased from

Such Parties qualified as Primary or Secondary Subordinated Debts - -

Loan granted to Customer against the Articles 50 and 51 of the Banking Law - -

Net Book Values of Immovables exceeding 50%of the Capital and of Assets

Acquired against Overdue Receivables and Held for Sale as per the Article 57

of the Banking Law but Retained more than Five Years - -

TOTAL SHAREHOLDERS' EQUITY 190,618 146,429


II. Credit risk

The loan customers are not subject to the concentration risk limits according to their geographical segments, risk

groups, or sectors. However the Bank pays attention to keep the sector concentration within the acceptable limits.

In compliance with the banking legislations the Bank does not work with the untrustworhty individuals and

corporates, which are listed in the international watchlists..

Credit limit allocation and credit extension procedures, forward transactions and the transactions related with the

other derivative instruments, the limits and the risk exposures of the daily cash transactions of the customers are

approved by the different level of people from the Bank's management team according to their related authorization

limits. The risk limits and concentrations of the daily on and off balance sheet transactions are monitored per each

customer by the authorized people of the treasury department of the Bank.

Subsequent to the approval of the Board of Directors, a credit limit is allocated to the customer based on the

customer's latest audited financial statements and its financial position in the market and cash or non-cash loan is

extended to this customer within these limits.

The credit risk of the forward transactions are managed with the potential risks arising from the fluctuations in the

market and it is avoided from the transactions that could have significant credit risks.

The credit worthinesses of customers are followed up on a regular basis in accordance with related regulations and

accordingly the credit limits of the customers are revised, if necessary. There isn't any collateral obtained for the

existing cash loans as of the balance sheet date.

The Bank does not have any material credit risk.

There isn't any matured and unpaid non-cash loans or restructured cash loans .

The Bank, as an active player in the international banking market, does not hold significant credit risk when

compared to the financial activities of the other international financial institutions .

The Bank's cash loan portfolio is composed of 15 customers as of December 31, 2006.

The general provision allocated for the cash loans amounts to TRY 428 at December 31, 2006.





56

1. Geographical concentration

Non-cash Capital Assets Liabilities Loans Expenditures Net Profit/(Loss)

Current PeriodDomestic 878,642 646,798 61,983 - 87,399

European Union (EU) Countries 2,473 2,639 80,336 - (42,040)

OECD Countries (*) 97 726 - - -

Off-Shore Banking Regions - - - - -

USA, Canada 608 35,438 7,165 - (73)

Other Countries 134 3,684 21,534 - -

Associates and Affiliates - - - - -

Unallocated Assets/Liabilities ** - - - - -

Total 881,954 689,285 171,018 - 45,286

Non-cash Capital Assets Liabilities Loans Expenditures Net Profit/(Loss)

Prior PeriodDomestic 255,137 126,061 59,043 - 63,199

European Union (EU) Countries 11,153 22,825 16,428 - (38,333)

OECD Countries (*) 73 197 1,358 - -

Off-Shore Banking Regions - - - - -

USA, Canada 34,504 - 2,665 - (99)

Other Countries 4,399 21,246 - -

Associates and Affiliates - - - - -

Unallocated Assets/Liabilities ** 39,818 38,718 - - -

Total 300,867 153,482 100,740 - 24,767

(*) OECD countries other than EUcountries, USA and Canada

(**) Assets/Liabilities which can not be allocated.


2. Sectoral distribution of cash loans

Current Period Prior PeriodYTL (%) FC (%) YTL (%) FC (%)

Agriculture - - - - - - - -Farming and Stockbreeding - - - - - - - -

Forestry - - - - - - - -

Fishery - - - - - - - -

Manufacturing 61,726 86 - - 59,087 100 - -Mining - - - - - - - -

Production 61,726 86 - - 59,087 100 - -

Electricity, Gas, Water - - - - - - - -

Construction - - - - - - - -Services 10,031 99 9,409 100 - - 4,314 100Wholesale and Retail Trade 8,997 13 9,276 99 - - 4,314 100

Hotel, Food and Beverage Services - - - -

Transportation and Telecommunication 1,034 1 - - - - -

Financial Institutions - - - - - - - -

Real Estate and Renting Services - - - - - - - -

“Self-Employment” Type Services - - - - - - - -

Educational Services - - - - - - - -

Health and Social Services - - - - - - - -

Other - - 133 1 13 - - -Total 71,757 100 9,409 100 59,100 100 4,314 100

III. Market Risk

Being exposed to market risk, the Bank's Board of Directors has identified risk management strategies and policies

considering the suggestions by the Executive Risk Committee and has pursued the implementation of these

strategies periodically. Considering the existing major risks, the Bank's Board of Directors determines and revises

the risk limits, when necessary. The Board of Directors ensures that the risk management group and the executive

management are taking necessary actions in identifying, measuring, monitoring and managing the various risks that

the Bank exposes to.

The Bank performs daily stress testings related with the asset-liability management and Deutsche Bank AG

performs the 'VAR' analyses.

The market risk exposed positions are transferred to the treasury department with the most appropriate market

prices for each assets and liabilities. The treasury department prepares the daily market yield curves which is used

as reference prices for such transfers.

The capital requirement for the general market risk and specific risks is calculated using the standard method in

accordance with the “Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks” and

reported monthly.





58

a) Value at market risk

Current Period Prior Period(I) Capital Requirement for General Market Risk-Standard Method 9,519 1,155

(II) Capital Requirement for Specific Risks-Standard Method - -

(III) Capital Requirement for Currency Risk-Standard Method 1,244 1,300

(IV) Capital Requirement for Stocks Risks-Standard Method - -

(V) Capital Requirement for Exchange Risks-Standard Method - -

(VI) Capital Requirement for Market Risks of Options-Standard Method - -

(VII) Capital Requirement for Market Risks of Banks applying Risk

Measurement Models - -

(VIII) (VIII) Total Capital Requirement for Market Risk (I+II+III+IV+V+VI) 10,763 2,455(IX) Value-At-Market Risk ((12.5*VIII) or (12.5*VII)) 134,538 30,688

b) Monthly average values at market risk

Current Period Prior PeriodAverage Highest Lowest Average Highest Lowest

Interest Rate Risk 7,603 15,896 1,650 6,757 16,320 1,155

Common Share Risk - - - - - -

Currency Risk 847 1,564 328 1,050 3,106 84

Stock Risk - - - - - -

Exchange Risk - - - - - -

Option Risk - - - - - -

Total Value at Risk 105,624 202,800 26,488 97,591 207,369 30,688

IV. Operational Risk

In accordance with the “Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks”

published by BRSA on November 1, 2006, the operational risk will be calculated beginning from June 1, 2007.


V. Foreign currency risk

The Bank manages its foreign currency balance sheet by paying maximum attention to comply with the regulations

of the related authorities and by choosing the most appropriate methods to the Bank's liquidity and profitability

policies.

The position limit regarding the foreign currency risk is determined as parallel to the net foreign currency position

standard rate. As of December 31, 2006, the Bank's net 'on balance sheet' foreign currency short position amounts

to TRY 400,083, net 'off-balance sheet' foreign currency long position amounts to TRY 388,650, while their net

foreign currency short position amounts to TRY 11,433.

Standard method, which is also used for the statutory reporting purposes, is used to measure the Bank's foreign

currency risk .

The Bank's effective exchange rates at the date of balance sheet and for the last five working days of the period

announced by the Bank in TRY are as follows:

25.12.2006 26.12.2006 27.12.2006 28.12.2006 29.12.2006USD 1.4186 1.4222 1.4198 1.4192 1.4131

CHF 1.1666 1.1646 1.1623 1.1614 1.1543

GBP 2.7869 2.7937 2.7806 2.7803 2.7689

JPY 1.1958 1.1952 1.1919 1.1937 1.1872

EURO 1.8725 1.8686 1.8650 1.8668 1.8586

The arithmetical average of the Bank's US$, EUR, CHF, GBP and JPY purchase rates for the last 30 days before

the balance sheet date are listed below:

USD 1.4264

CHF 1.1782

GBP 2.8001

JPY 1.2154

EURO 1.8843





60

Information on Bank's Foreign Currency Risk: (thousands of TRY)

EURO USD JPY Other FC TotalCurrent Period AssetsCash (Cash on Hand, Money in Transit, Purchased Cheques) and Balances with the Central Bank of Turkey - 68 - - 68Banks and Other Financial Institutions 1.028 5.728 - 1.602 8.358Financial Assets at Fair Value through Profit/Loss 682 229 - - 911Money Market Placements - - - - -Investment Securities Available-for-Sale - - - - -Loans 32,803 9,325 - 6,020 48,148Investments in Associates, Subsidiariesand Joint-Ventures - - - - -Investment Securities Held-to-Maturity - - - - -Derivative Financial assets held for risk management - - - - -Tangible assets - - - - -Intangible Assets - - - - -Other Ass Other Assets 3,793 2,169 - 12 5,974Total Assets 38,306 17,519 - 7,634 63,459LiabilitiesBank Deposits - 381,751 - - 381,751Foreign Currency Deposits 5,827 68,993 - 7 74,827Money Market Takings - - - - -Funds Borrowed - - - - -Securities Issued - - - - -Miscellaneous Payables - - - - -Derivative financial liabilities held for risk management - - - - -Other Liabilities 2,644 4,298 - 22 6,964Total Liabilities 8,471 455,042 - 29 463,542

Net 'On Balance Sheet' Position ( 29,835) (437,523) - 7,605 400,083Net 'Off-Balance Sheet' Position 9,925 381,264 - (2,539) (388,650)Derivative Assets 64,864 569,132 - - 633,996Derivative Liabilities (54,939) (187,868) - (2,539) (245,346)Non-Cash Loans(*) 64,867 133,574 - - 198,441

EURO USD JPY Other FC TotalPrior Period Total Assets 19,057 46,162 - 3,414 68,633Total Liabilities (27,405) (30,556) - (296) (58,257)Net ' On Balance Sheet' Position (8,348) 15,606 - 3,118 10,376Net 'Off-Balance Sheet' Position (7,904) (10,725) - - (18,629)

Derivative Assets 120,551 389,979 - 35,651 546,181Derivative Liabilities (128,455) (400,704) - (35,651) (564,810)Non-Cash Loans(*) 43,742 56,141 - - 99,883

(*) Does not have any effect on net'off-balance sheet' position


VI. Interest rate risk

The interest rate sensitivity of assets, liabilities and off-balance sheet items are evaluated monthly at Asset-LiabilityCommittee meetings and weekly Bank Risk Committee meetings .

The Bank's interest rate risk is measured by using the standard method. The Bank provides information to its mainshareholder Deutche Bank AG for their, Value at Risk (VAR), risk measurement methods and performs sensitivityanalyses.

Standard method measurements are performed monthly by using the maturity distribution; while the VaRcalculations are performed on a daily basis.

The interest rate risk of local and foreign currency denominated financial assets held for trading and financial assetsheld for available for sale is measured by the daily interest rate sensitivity anayses.

1. Interest rate sensitivity of assets, liabilities and off balance sheet items:

Up to 1-3 3-6 6-12 1 Year Non-InterestCurrent Period 1 Month Months Months Months and Over Bearing TotalAssetsCash and Balances with the Central Bank of Turkey - - - - - 42,575 42,575Banks and Other Financial Institutions 5,070 - - - - 3,472 8,542Financial Assets at Fair Value through Profit/Loss 7,201 74 5,908 86,778 580,982 - 680,943Money Market Placements 50,072 - - - - - 50,072Investment Securities Available-for-Sale - - - - - - -Loans 51,804 8,869 20,493 - - - 81,166Investment Securities Held-to-Maturity - - - - - - -Other Assets - - - - - 18,656* 18,656

Total Assets 114,147 8,943 26,401 86,778 580,982 64,703 881,954

LiabilitiesBank Deposits 411,829 - - - - 40,351 452,180Other Deposits 51,022 7,210 - - - 17,569 75,801Money Market Takings 135,310 - - - - - 135,310Miscellaneous Payable - - - - - 414 414Securities Issued - - - - - - -Funds Borrowed - - - - - - -Other Liabilities 2,686 158 357 - - 215,049** 218,250

Total Liabilities 600,847 7,368 357 - - 273,382 881,954

On Balance Sheet Long Position - 1,575 26,044 86,778 580,982 - 695,379On Balance Sheet Short Position (486,700) - - - - (208,679) (695,379)Off-Balance Sheet Long Position 616,902 65,519 43,963 - - - 726,384Off-Balance Sheet Short Position (619,840) (65,364) (43,735) (728,939)Net off Balance Sheet Short Position (2,938) 155 228 - - - (2,555)Total Position (489,638) 1,730 26,272 86,778 580,982 (16,016) 192,644

(*) Includes tangible assets amounting to TRY 4,475(**)Consists of shareholders' equity amounting to TRY 192,669





62

Up to 1-3 3-6 6-12 1 Year Non-InterestPrior Period 1 Month Months Months Months and Over Bearing TotalAssetsCash and Balances with the

Central Bank of Turkey - - - - - 1,203 1,203

Banks and Other Financial Institutions 39,149 - - - - 2,587 41,736

Financial Assets at Fair Value through

Profit/Loss 1,465 102 116,692 1,489 44,230 - 163,978

Money Market Placements - - - - - - -

Investment Securities Available-for-Sale (Net) - - - - - - -

Loans (*) 11,987 44,765 1,407 5,255 - - 63,414

Investment Securities Held-to-

Maturity (Net) - - - - - - -

Other Assets - - - - - 30,536* 30,536

Total Assets 52,601 44,867 118,099 6,744 44,230 34,326 300,867

LiabilitiesBank Deposits 55,051 - - - - 11,828 66,879

Other Deposits - - - - - 40,841 40,841

Money Market Takings 2,182 - - - - - 2,182

Miscellaneous Payable - - - - - 167 167

Securities Issued (Net) - - - - - - -

Funds Borrowed - - - - - - -

Other Liabilities 1,057 171 3,447 - - 186,120** 190,798

Total Liabilities 58,290 171 3,447 - - 238,956 300,867

On balance-sheet short position (5,689) 44,696 114,652 6,741 44,230 (204,630) -Off Balance Sheet Short Position - - - - - - -Total Position (5,689) 44,696 114,652 6,741 44,230 (204,630) -

(*) Includes tangible assets amounting to TRY 3,965.

(**) Consists of shareholders' equity amounting to TRY 147,383.


Average interest rates on monetary financial instruments:

Current Period EURO% USD% JPY% TRY% CHF%AssetsCash and Balances with the Central Bank of Turkey - 2.52 - - -

Banks and Other Financial Institutions - - - - -

Financial Assets at Fair Value through Profit/Loss - - - 18.32 -

Money Market Placements - - - 17.50 -

Investment Securities Available-for-Sale (Net) - - - - -

Loans 4.31 6.17 - 20.83 2.80

Investment Securities Held-to-Maturity (Net) - - - - -

LiabilitiesBank Deposits - 5.28 - 14.17 -

Other Deposits - - - - -

Money Market Takings - - - 16.00 -

Miscellaneous Payable - - - - -

Securities Issued - - - - -

Funds Borrowed - - - - -

Prior Period EURO% USD% Yen% YTL% CHF%AssetsCash and Balances with the Central Bank of Turkey - 1.925 - 10.25 -

Banks and Other Financial Institutions - 4.05 - 14.80 -

Financial Assets at Fair Value through Profit/Loss - - - 16.61

Money Market Placements - - - - -

Investment Securities Available-for-Sale - - - - -

Loans 2.99 5.44 - 15.03 1.88

Investment Securities Held-to-Maturity - - - - -

LiabilitiesBank Deposits - - - 14.73 -

Other Deposits - - - - -

Money Market Takings - - - - -

Miscellaneous Payable - - - - -

Securities Issued - - - - -

Funds Borrowed - - - - -





64

VII. Liquidity risk

1. The resources of the current liquidity risk; whether the necessary precautions have been taken, whetherthe Board of Directors sets limits on the funds available to meet the urgent liquidity requirements and tobe able to pay borrowings when they become due.

Liquidity risk is managed by considering the main criteria such as (1) the expected cash flows at related time

intervals, (2) the possibility and capacity of borrowing from the market, (3) the credit quality of the assets on the

balance sheet.

In addition to the compliance with the legal limitations regarding the liquidity, the Bank monitors from the cash flow

reports that there are matching borrowing opportunities with the cash out-flows within the same time interval.

2. The matching of the payments, assets and liabilities and the interest rates, and the possible impact ofthe current mismatch on the profitability of the Bank

The Bank's assets and liabilities carry positive interest earnings. The assets and liabilities are repriced in one month

in average. Therefore, the Bank carries limited interest rate risk.

3. Internal and external resources that meets the short and long term liquidity needs of the Bank andunutilized significant liquidity resources;

The Bank monitors that the maturity matching of the assets and liabilities are kept. The Bank keeps sufficient liquid

assets to meet liquidity needs caused by the fluctuations in the market. .


4. The assessment of the amounts and resources of the Bank's cash flows;

As explained above, the Bank has sufficient cash and cash inflows in order to be able to timely meet the cashoutflows.

Maturity analysis of assets and liabilities (according to remaining maturities):

Up to 1 1-3 3-6 6-12 1 year UndistributedDemand month Months Months Months and over (**) Total

Current PeriodAssetsCash and Balances with the Central

Bank of Turkey 42,575 - - - - - - 42,575

Banks and Other Financial Institutions 3,472 5,070 - - - - - 8,542

Financial assets at fair value through

profit or loss - 7,201 74 5,908 86,778 580,982 - 680,943

Money Market Placements - 50,072 - - - - - 50,072

Investment Securities Available-for-Sale - - - - - - - -

Loans - 51,804 8,869 20,492 - - - 81,166

Investment Securities Held-to-Maturity - - - - - - - -

Other Assets - - - - - - 18,656* 18,656

Total Assets 46,047 114,147 8,943 26,401 86,778 580,982 18,656 881,954

LiabilitiesBank Deposits 40,351 411,829 - - - - - 452,180

Other Deposits 17,569 51,022 7,210 - - - - 75,801

Funds Borrowed - - - - - - - -

Money Market Takings - 135,310 - - - - - 135,310

Securities Issued - - - - - - - -

Miscellaneous Payables 414 - - - - - - 414

Other Liabilities - 2,686 158 357 - - 215,048*** 218,249

Total Liabilities 58,334 600,847 7,368 357 - - 215,048 881,954

Liquidity Gap 12,287 (486,700) 1,575 26,044 86,778 580,982 (196,392) -

Prior PeriodTotal Assets 3,768 43,012 45,280 126,909 13,891 46,599 21,408 300,867

Total Liabilities 52,842 59,126 223 3,450 - - 185,226 300,867

Liquidity Gap (49,074) (16,114) 45,057 123,459 13,891 46,599 (163,818) -

(*) Other assets include fixed assets amounting to TRY 4,475.

(**) Certain assets on the balance sheet that are necessary for the banking operations but not convertable into

cash in short period such as tangible assets, subsidiaries and joint-ventures and prepaid expenses are

included in this column.

(***) Consists of shareholders' equity amounting to TRY 192,669.





66

VIII. Fair values of financial assets and liabilities

The following table shows the fair values and the carrying values of the financial assets and liabilities that are notshown with their fair values in the Bank's financial statements.

Carrying Value Fair ValueCurrent Period Prior Period Current Period Prior Period

Financial Assets 101,189 42,939 101,189 42,939Banks and Other Financial Institutions 101,189 42,939 101,189 42,939Investment Securities Available-for-Sale - - - -Investment Securities Held-to-Maturity - - - -

Financial Liabilities 663,705 110,069 663,705 110,069Bank Deposits 452,180 66,881 452,180 66,881Other Deposits 75,801 40,839 75,801 40,839Funds Borrowed 135,310 2,182 135,310 2,182Securities Issued - - - -Miscellaneous Payables 414 167 414 167

The carrying values of the items above represent their cost values plus their accrued interest incomes calculatedwith the effective interest rate method.

IX. Transactions carried out on behalf of customers, items held in trust

1. Purchasing, selling,custody, management and advisory services which are carried out by bank on behalfof customers

The Bank provides intermediary services for the purchase and sale of financial assets on behalf of the customersand custody services. The Bank also provides financial management consultancy.

2. Whether operations with financial institutions and financial services in the context of transactionagreements held in trust effect the financial situation of the Bank significantly.

The Bank is not involved in trust activities

X. Segment reporting

1. Investment Banking Operations

The investment banking operations of the Bank mainly comprise of treasury transactions such as money markettarnsactions, purchase and sales of marketable securities and foreign currency transactions.

2. Corporate Banking and Finance Operations

The corporate banking activities of the Bank are mainly comprise of account transferring, opening current accounts,granting collateralized non-cash, cash loans and intermediary services for the export/import transactions of thecustomers.

3. Retail Banking Operations

The Bank does not operate in the retail banking sector.


SECTION FIVE

I. Assets

1.a Cash and balances with Central Bank

Current Period Prior PeriodYTL FC YTL FC

Cash in YTL/Foreign Currency - - - -

Central Bank of Turkey 42,507 68 1,138 65

Others - - - -

Total 42,507 68 1,138 65

1.b Balances with the Central Bank of Turkey


Unrestricted Demand Deposits 42,507 68 1,138 65

Unrestricted Time Deposits - - - -

Restricted Time Deposits - - - -

Total 42.507 68 1.138 65

1.c Reserve Deposits

According to the no. 2005/1 announcement of the Central Bank of Turkey, “Announcement on Reserve Deposits”,

all banks operating in Turkey should provide a reserve amounting to 6%of the liabilities in Turkish Lira and 11% of

the liabilities in foreign currencies. The Central Bank of Turkey makes interest payments on a quarterly basis. The

interest rates given by the Central Bank of Turkey are 13.12%for YTL, 2.525%for USD and 1.71%for Euro as of

December 31, 2006.

2. Further information on financial assets at fair value through profit/loss

2.a Financial Assets at fais value through profit/loss

2.a.1 Financial assets at fair value through profit/loss subject to repurchase agreements and provided ascollateral/blocked


Share Certificates - - - -

Government Securities, Treasury Bills, and other securities 236,975 - 109,260

Others - - - -

Total 236,975 - 109,260 -



68

Deutsche Bank Anonim fiirketi 31 Aral›k 2005 Tarihi ‹tibariyle Mali Tablolara ‹liflkin Dipnotlar(Para birimi: Bin Yeni Türk Liras› olarak ifade edilmifltir.)

2.a.2 Financial assets at fair value through profit/loss subject to repurchase agreements


Government Bonds 155,426 - 2,369 -

Treasury Bonds - - - -

Other Securities - - - -

Bond issued or Guaranteed by Bank - - - -

Asset Backed Securities - - - -

Others - - - -

Total 155,426 - 2,369 -

2.b Positive differences on trading derivative instrumentss

Trading Derivative Current Period Prior PeriodInstruments YTL FC YTL FCForward Transactions - 911 - 6,396

Swap Transactions - - - -

Futures - - - -

Options - - - -

Other - - - -

Total - 911 - 6,396

3.a Banks and other financial institutions

Current Period Prior Period YTL FC YTL FC

Banks

Domestic banks 184 5,179 2,114 3,606

Foreign banks - 3,179 - 36,016

Foreign headoffices and branches - - - -

Other Financial Institutions - - - -

Total 184 8,358 2,114 39,622

Foreign banks

Unrestricted Balances Restricted BalancesCurrent Period Prior Period Current Period Prior Period

EU Countries 2,473 1,868 - -

USA and Canada 608 34,075 - -

OECD Countries (*) 98 73 - -

Off-shore Banking Regions - - - -

Other - - - -

Total 3,179 36,016 - -

(*) OECD countries other than the EU countries, USA and Canada


4. Investment Securities Available-for-Sale

The Bank does not have any investment securities available for sale as of December 31, 2006.

5. Loans

5.1 Loans and advances to shareholders and employees of the Bank

Current Period Prior PeriodCash Non-Cash Cash Non-Cash

Direct Lendings to Shareholders - - - -Corporates - - - -

Individuals - - - -

Indirect Lendings to Shareholders - - - -Loans to Employees - - 105 -Total - - 105 -

5.2 Loans and other receivables classified in groups I and II and restructured or rescheduled

Performing Loans and Other Loans under Follow-Up and Receivables (Group I) Other Receivables (Group II)

Restructured or Restructured orRescheduled Rescheduled

Loans and Other Loans and Other Loans and Other Loans and Other Cash Loans Receivables Receivables Receivables ReceivablesLoans 81,166 - - -Discounted Bills 133 - - -

Export Loans 9,276 - - -

Import Loans - - - -

Loans to Financial Sector - - - -

Foreign Loans - - - -

Consumer Loans - - - -

Credit Cards - - - -

Precious Metal Loans - - - -

Factoring - -

Other 72,757 - - -

Specialization Loans - - - -Other Receivables - - - -Total 81,166 - - -





70

5.3 Maturity analysis of cash loans

Performing Loans and Other Loans under Follow-Up and Receivables (Group I) Other Receivables (Group II)

Restructured or Restructured or Rescheduled Rescheduled

Loans and Other Loans and Other Loans and Other Loans and Other Receivables Receivables Receivables Receivables

Short-term Loans - - -Loans 81,166 - - -

Specialization Loans - - - -

Other Receivables - - - -

Medium and Long-term Loans - -Loans - - - -

Specialization Loans - - - -

Other Receivables - - - -

Total 81,166 - - -

5.4 Consumer loans, retail credit cards, personnel loans and personnel credit cards:

None.

5.5 Installment based commercial loans and corporate credit cards

None.

5.6 Allocation of Loan Customers

Current Period Prior PeriodPublic Sector - -

Private Sector 81,166 63,414

Total 81,166 63,414

5.7 Allocation of domestic and foreign loans

Current Period Prior PeriodDomestic Loans 81,033 63,414

Foreign Loans 133 -

Total 81,166 63,414


5.8 Loans to investments, associates and subsidiaries

None.

5.9 Specific provisions for loans

None.

5.10 Non-performing loans(NPLs) (Net)

None.

5.11 Liquidation policy for uncollectible loans and receivables

None.

6. Investment securities held-to-maturity (net)

None.

7. Investments in associates (Net)

None.

8. Investments in subsidiaries (Net)

None.

9. Investments in Joint Ventures (Net)

None.

10. Lease receivables (Net)

10.a Maturity profile of lease receivables

None.

10.b Information on investments made via leasing

None.

10.c Information on finance lease agreements

None.





72

11. Derivative financial instruments held for risk management

11.a Positive differences on trading derivatives held for risk management

None.

12. Tangible assets (Net)

Leased OtherTangible Tangible

Real Estates Assets Vehicles Assets TotalBalance at the end of prior period

Cost - - 600 11,100 11,700

Accumulated Depreciation (-) - - (407) (7,328) (7,735)

Net Book Value - - 193 3,772 3,965

Balance at the end of current periodNet Book Value at Beginning of

Current Period - - 193 3,772 3,965

Additions - 1,020 - 945 1,965

Disposals(-) - - - - -

Impairment(-) - - - - -

Depreciation(-) - (304) (54) (1,260) (1,618)

Currency Translation Differences on

Foreign Operations (-) - - - - -

Net Book Value at the End of Current Period - 716 139 3,457 4,312

12.1 There isn't any impairment losses provided or released during the current period.

12.2 There isn't any impairment losses provided or released during the current period that are individiuallyimmaterial but significicant to the financial statements in aggregate.

13. Other disclosures for intangible assets (Net)

The Bank has intangible assets amounting TRY 163 as of December 31, 2006.


14. Deferred tax assets

14.1 Timing differences, tax losses and tax deductions and exemptions

The Bank has deferred tax assets amounting TRY 603 calculated on temporary tax deductable differences as of

December 31, 2006.

14.2 The unrecognized deferred taxasset calculated over the temporary tax deductable differences in theprior periods

None.

14.3 Valuation allowances

There isn't any valuation allowance for the deferred tax assets.

15. Other Assets

15.1 Prepaid Expenses,tax and similar transactions

Current Period Prior PeriodPrepaid tax 4,578 16,421

Prepaid expense 1,280 286

Other* 7,720 9,864

Total 13,578 26,571

* Includes commission service income amounting TRY 2,852 as of December 31, 2006. (December 31, 2005:

TRY 6,851)

15.2 At least 20%of the sub-accounts of other assets on the balance sheet are explained above with the related balances.





74

II. Liabilities

1. Maturity profile of deposits

a.1) Current Period:

7 Days Up to 1 1-3 3-6 6-12 1 Year Demand Notice Month Months Months Months and Over

Saving Deposits - - - - - - -Foreign Currency Deposits 16,619 - 50,998 7,210 - - -

Residents in Turkey 16,613 - 50,998 7,210 - - -

Residents abroad 6 - - - - - -

Public Sector Deposits - - - - - - -Commercial Deposits 949 - 24 - - - -Other 1 - - - - - -Precious Metal Deposits - - - - - - -Bank Deposits 40,351 - 411,829 - - - -

Central Bank of Turkey - - - - - - -

DomesticBanks - - 411,829 - - - -

Foreign Banks 40,351 - - - - - -

Special Purpose F‹nance Institutions. - - - - - - -

Other - - - - - - -

Total 57,920 - 462,851 7,210 - - -

a.2) Prior Period:

7 Days Up to 1 1-3 3-6 6-12 1 Year Demand Notice Month Months Months Months and Over

Saving Deposits - - - - - - -Foreign Currency Deposits 38,639 - - - - - -

Residents in Turkey 38,635 - - - - - -

Residents abroad 4 - - - - - -

Public Sector Deposits - - - - - - -Commercial Deposits 2,199 - - - - - -Other 1 - - - - - -Precious Metal Deposits - - - - - - -Bank Deposits 11,836 - - - - - -

Central Bank of Turkey - - - - - - -

DomesticBanks 7 - 55,045 - - - -

Foreign Banks 11,829 - - - - - -

Special Purpose F‹nance Institutions. - - - - - - -

Other - - - - - - -

Total 52,675 - 55,045 - - - -


b.1) Saving deposits covered by deposit insurance and total amount of deposits exceeding insurancecoverage limit:

None.

b.2) Saving deposits at domestic branches of foreign banks in Turkey under the coverage of foreigninsurance

None.

b.3) Saving deposits out of the insurance coverage limits of Saving Deposit Insurance Fund

None.

2. Derivative financial liabilities held for trading

2.a Negative differences on derivative financial liabilities held for trading

Derivative Current Period Prior Period Financial Liabilities YTL FC YTL FCForward deals - 3,200 - 4,678

Swaps - - - -

Futures - - - -

Options - - - -

Other - - - -

Total - 3,200 - 4,678

3.a Banks and other financial institutions:


Central Bank of Turkey - - - -

Domestic Banks and Institutions - - - -

Foreign Banks, Institutions and Funds - - - -

Total - - - -

3.b Maturity information of funds borrowed


Short-term - - - -

Medium and Long-term - - - -

Total - - - -





76

3.c Additional information on concentration areas of the Bank's liabilities

“Other External Resources Payables” amounting TRY 148 as of December 31, 2006 (December 31, 2005: TRY 100)

is comprised of upfront fees and taken from the non-cash loan customers.

4. At least 20%of the sub-accounts of other liabilities on the balance sheet, exceeding 10%of the totalliabilities excluding the off balance sheet items.

None.

5. Criteria used in the determination of finance lease installments, renewal or repurchase options,restrictions and significant contingent liabilities exist on the Bank's finance lease contracts;

Finance lease terms are mostly 4 years. Interest rates and the Bank's cash flow position are taken into

consideration in those finance lease contracts. There aren't any conditions on these contracts, which may result as

significant contingent liabilities for the Bank.

5.1 Changes in the conditions of the agreements and their new burden fort he Bank

None.

5.2 Finance lease payables

Current Period Prior PeriodGross Net Gross Net

Up to 1 Year 146 118 1 -

1-4 Years 347 309 - -

More than 4 Years - - - -

Total 493 427 1 -

5.3 Operational lease agreements

Vehicles, photocopy machines and office buildings are subject to the Bank's operational leasing activities.

5.4 Sale and lease-back agreements

None.


6. Derivative financial liabilities held for risk management

6.a Negative differences on derivative financial liabilities held for risk management

None.

7. Provisions

7.a General provisions

Current Period Prior PeriodGeneralProvision for 671 638

Loans and Receivables in Group I 428 537

Loans and Receivables in Group II - -

Non-Cash Loans 243 81

7.b Provisions for foreign exchange differences on foreign currency indexed loans

Current Period Prior PeriodProvisions for foreign exchange differences on foreign currency indexed loans(*) 539 816

(*) Foreign exchange difference amounting TRY 539 as of December 31, 2006 is netted from the loans on the

asset side.

7.c Allowances for impairment losses as a result of the delivery date accounting

Current Period Prior PeriodAllowances for impairment losses as a result of the delivery date accounting 1 1

7.d Other provisions

7.d.1 General reserves for possible losses

None.





78

7.d.2 Information on other provisions exceeding 10%of total provisions

Current Period Prior Period YTL FC YTL FC

Other Reserves for Employee Benefits 5,846 - 4,680 -

Operational expense provisions - - - -

“Civil Defence Fund” provisions - - - -

Attorney expense accruals - 433 - 412

Other* 860 2,756 119 19,180

Total 6,706 3,189 4,799 19,592

(*) TRY 2,703 of other FC figures as of December 31, 2006 is comprised of the provisions recorded for the

payments that will be paid based on the service agreement signed with Deutsche Bank Group. (December

31, 2005: TRY 18,737).

8. Tax Liability

8.a.1 Current tax liability

Current Period Prior PeriodCorporate tax and deferred tax: YTL YTL TP FCCorporate tax payable 9,795 - 12,733 -

Deferred tax liability - - 367 -

Total 9,795 - 13,100 -

8.a.2 Information on taxes payable

Current Period Prior PeriodCorporate taxes payable - -

Taxation on securities 50 4

Capital gains tax on property - -

Banking insurance transaction tax (BITT) 377 147

Taxes on foreign exchange transactions 23 98

Value added tax 140 -

Others* 594 210

Total 1,184 459

* Includes witholding income taxes amounting TRY 290 as of December 31, 2006.


8.a.3 Informations on contribution payables

Current Period Prior PeriodSocial security premiums-employee share 35 19

Social security premiums-employer share 50 26

Bank pension fund premium-employee share - -

Bank pension fund premium-employer share - -

Pension fund membership fees and provisions-employee share - -

Pension fund membership fees and provisions-employer share - -

Unemployment insurance-employee share 3 1

Unemployment insurance-employer share 5 2

Other - -

Total 93 49

8.b Deferred Tax Liability

None.

9. Payables related to assets held for sale

None.

10. Subordinated loans

None.

11. Shareholders' Equity

11.1 Paid-in capital

Current Period Prior PeriodCommon Stock 30,000 20,000

Preferred Stock - -

Total 30,000 20,000

11.2 Paid-in capital amount, explanation as to whether the registered share capital system is applicableat Bank; if so the amount of registered share capital

Capital System Paid-in Capital Ceiling The Bank is not subject to registered share capital system. 30,000 -





80

11.3 Information on share capital increases and their sources during the current period

The share capital of the Bank increased from TRY 20 million to TRY 30 million from the extraordinary reserves,

based on the decision taken on the General Assembly meeting held on November 3, 2006.

11.4 Information on share capital increases from revaluation funds

None.

11.5 Prior period indicators of the Bank's income, profitability and liquidity; and possible effects of thepredictions on equity, considering the ambiguity of the indicators

None.

11.6 Information on privileges given to stocks representing the capital

None.

11.7 Securities value increase fund

None.

11.8 Minority interest

There isn't any minority interest on the accompanying unconsolidated financial statements.

III. Off-balance Sheet Items

1. Off-balance sheet contingencies

1.a Irrevocable credit commitments

None.

1.b Possible losses and commitments resulted from off-balance sheet items including the following

1.b.1 Non-cash loans including guarantees, bank acceptances, letters of guarantee substitute for financial

guarantees and other letters of credit

As of December 31, 2006, amount of letters of guarantee, letters of credit and sureties are TRY 129,681, TRY

29,257 and TRY 41,337, respectively. (As of December 31, 2005, amount of letters of guarantee, letters of credit

and sureties are TRY 44,120, TRY 5,400 and TRY 51,220, respectively.)


1.b.2 Permanent and temporary letters of guarantees, sureties and similar transactions

None except the items explained above in note 1.b.1.

1.c.1 Non-cash loans

Current Period Prior PeriodNon-Cash Loans against Cash Risks - -

With Original Maturity up to 1 Year - -

With Original Maturity of More Than 1 Year - -

Other Non-Cash Loans 200,275 104,801

Total 200,275 104,801

1.c.2 Sectoral risk concentration of non-cash loans

Current Period Prior PeriodYTL (%) FC (%) YTL (%) FC (%)

Agriculture - - - - - - - -

Farming and Stockbreeding - - - - - - - -

Forestry - - - - - - - -

Fishery - - - - - - - -

Manufacturing 678 37 105,653 53 756 88 31,463 31

Mining - - - - - - - -

Production 678 37 63,260 32 756 88 31,463 31

Electricity, Gas, Water - - 42,393 21 - - - -

Construction - - 46,408 23 - - 28,006 28

Services 615 34 42,971 22 31 4 36,656 37

Wholesale and Retail Trade - - 20,992 11 - - 27,831 28

Hotel, Food and Beverage Services - - - - - - - -

Transportation and Telecommunication 584 32 9,270 5 - - - -

Financial Instutitutions 31 2 12,708 6 31 4 8,825 9

Real Estate and Renting Services - - - - - - - -

''Self-Employement'' Type Services - - - - - - - -

Educational Services - - - - - - - -

Health and Social Services - - - - - - - -

Other 542 30 3,409 2 70 8 3,758 4

Total 1,835 100 198,440 100 857 100 99,883 100





82

1.c.3 Non-cash loans classified under Group I and II:

Group I Group IIYTL FC YTL FC

Non-Cash LoansLetters of Guarantee 1,835 127,847 - -Bank Acceptances - - - -Letters of Credit - 29,257 - -Endorsements - - - -Underwriting Commitments - - - - Factoring Guarantees - - - - Other Commitments and Contingencies - 41,337 - -

2. Financial derivative instruments

Trading Hedging Trading HedgingDerivatives Derivatives Derivatives Derivatives

Current Period Current Period Prior Period Prior Period Trading Derivatives - - - - Foreign Currency Related Derivative

Transactions (I) 1,455,323 - 1,510,099 -Currency Forwards 647,437 - 1,085,511 -Currency Swaps 807,335 - 361,195 -Currency Futures 552 - 63,392 -Currency Options - - - -

Interest Rate Related Derivative Transactions (II) - - - -

Interest Rate Forwards - - - -Interest Rate Swaps - - - -Interest Rate Futures - - - -Interest Rate Options - - - -

Other Trading Derivatives (III) - - - -A. Total Trading Derivatives (I+II+III) 1,455,323 - 1,510,099 -Hedging Derivatives - - - -

Fair Value Hedges - - - -Cash Flow Hedges - - - -Hedges for Foreign Currency

InvestmentsB. Total Hedging Derivatives - - - -Total Derivative Transactions (A+B) 1,455,323 - 1,510,099 -


3. Contingent liabilities and assets

1.1 The Bank does not have any joint venture, and hence does not have any contingent liability caused bythis enterprise with the other venture capitalists and the joint venture does not have any contingentliability on its own.

1.2 Recognition and disclosure of contingent asset and liabilities;

There is not any contingent liability that should be recognized by the Bank as of December 31, 2006.

In 1995, a customer brang an action against the Bank, together with the other defendant, based on the claim that

a money transfer amounting USD 100,000 is made from his/her own account without his/her information nor

approval. This lawsuit was rejected by the Court in the Bank's favour on May 15, 2003. This decision is overrided

by the Supreme Court due to procedural issues and the lawsuit is again decided to be rejected in the Bank's favour

and with the new decision of the Court dated October 18, 2005. The decision is appealed by the parties and appeal

investigation still continues. The same customer opened an additional lawsuit against the Bank and the other

defendant to claim USD 7,900,000 and CHF 201,000 (USD 9,686,497 and CHF 253,976 including accrued interests

until the lawsuit date). By taking the progress of the lawsuit and the lawyer's opinion into account, it is decided not

to record any provision against this claim. The Bank recorded provisions for the attorney expenses.

BRSA auditor prepared a report which is explaining that the stamp taxes of the general loan agreements of the cash

borrowings obtained from abroad were not paid by The Bank. As a result of this report, the tax authority gave a tax

penalty to the Bank. However, the tax consultants of the Bank and the related customer agreed on that the tax

liability and its penalty is unfair and it is decided to open a lawsuit against for the annullment of the penalty. The tax

liability is amounting approximately USD 275,000 including its penalty and interest. With the decisions no. 2003/498

and 499 of Istanbul 2nd Tax Court, it is decided that the subject stamp tax should be cancelled. The subject court

appealed to the higher court for the annullment of the court decision, which was in favour of the Bank. Council of

State decided to cancel the claim after the appeal examination. The judgment process of the related lawsuits still

continues.

In 2005 the Bank opened a lawsuit against the report, which was prepared by the tax auditors, including the same

issues. The judgment process of this lawsuit still continues.





84

4. Services rendered on behalf of third parties

The Bank provides purchase and sales of the financial instruments and custody services on behalf of the third

parties. Financial instruments (nominal values) held on behalf of the individuals and corporates by the Bank are as

follows:

Current Period Prior PeriodTreasury Bonds-YTL 10,000 656,670

Government Bonds-YTL 921,257 5,923,986

Government Bonds-FC - -

Foreign Currency indexed loans exported by Treasury-USD - -

Eurobonds exported by Treasury-Euro - -

Shares-YTL 714,157 101,696

Shares-FC - -

Total 1,645,414 6,682,352

IV. Income statement

1 Interest Income

1.a Interest income on loans

Group I Group IIYTL FC YTL FC

Interest Income from LoansShort-term loans 12,395 340 5,058 294

Medium and long-term loans - - - -

Loans under follow-up - - - -

Premiums received from Resource Utilization Support Fund - - - -

1.b Interest income on banks


Central Bank of Turkey 2,357 114 45 46

Domestic Banks 747 20 940 14

Foreign Banks - 215 - 342

Foreign Headoffices and Branches - - - -

Total 3,104 349 985 402


1.c Interest income on securities portfolio


Trading Financial Assets 17,972 - 4,488 -

Financial Assets at Fair Value through Profit

or Loss - - - -

Investment Securities Available-for-Sale - - - -

Investment Securities Held-to-Maturity - - - -

Total 17,972 - 4,488 -

1.d Interest income received from associates and subsidiaries

None.

2 Interest Expenses

2.a Interest expenses on funds borrowed


Banks - - - -Central Bank of Turkey - - - -

Domestic Banks - - - -

Foreign Banks 46,514 74 25,706 87

Foreign Headoffices and Branches - - - -

Other Institutions - - - -

Total 46,514 74 25,706 87

2.b Interest expenses paid to associates and subsidiaries

None.

2.c Interest expenses on securities issued

None.





86

2.d Maturity structure of the interest expense on deposits

Time DepositsDemand Up to 1 1-3 3-6 6-12 1 year

Account Description Deposits Month Months Months Months and over TotalYTL

Bank Deposits - 4,266 - - - - 4,266

Saving Deposits - - - - - - -

Public Sector Deposits - - - - - - -

Commercial Deposits - 28 - - - - 28

Other - - - - - - -

“7 Days Notice” Deposits - - - - - - -

Total YTL - 4,294 - - - - 4,294

FC - -

Foreign Currency Deposits - 889 - - 889

“7 Days Notice” Deposits - - - - - - -

Precious Metal Deposits - - - - - - -

Bank Deposits - 16,191 - - - - 16,191

Total FC - 17,079 - - - - 17,079

Grand Total - 21,373 - - - - 21,373

3. Dividend Income

None.

4. Trading income/losses

Current Period Prior PeriodIncome 1,449,458 740,436

Trading Account Income 803,178 433,915

Derivative financial instruments 589,337 272,635

Others 213,841 161,280

Foreign Exchange Gain 696,280 306,521

Losses (-) 1,360,293 602,292Trading Account Losses 667,240 302,298

Derivative financial instruments 593,226 258,969

Others 74,014 43,329

Foreign Exchange Losses 693,053 299,994


5. Other operating income

There aren't any extraordinary events of developments that could have significant effects on the Bank's other

operating income.

6. Provisions for losses on loans and other receivables

Current Period Prior PeriodSpecific Provisions for Loans and Other Receivable - -

Loans and Receivables in Group III - -

Loans and Receivables in Group IV - -

Loans and Receivables in Group V - -

General Provisions 43 384

Provision for Possible Losses - -

Foreign Exchange Losses on Foreign Currency - -

Impairment Losses on Securities 21 1

Trading securities 21 1

Available-for-sale securities - -

Other Impairment Losses - -

Associates - -

Subsidiaries - -

Joint Ventures - -

Held to maturity securities - -

Other 470 -

Total 534 385





88

7. Other operating expenses

Current Period Prior PeriodPersonnel Costs 9,363 7,067

Reserve for Employee Termination Benefits - -

Provision for the deficit of the defined benefit plan - -

Impairment Losses on Tangible Assets - -

Depreciation Expenses of Tangible Assets 1,611 1,129

Impairment Losses on Intangible Assets - -

Impairment Losses on Goodwill - --

Amortisation Expenses of Intangible Assets 12 -

Impairment Losses on Investments Due to Equity Accounting - -

Impairment Losses on Assets Held for Sale - -

Depreciation Expenses of Assets Held for Sale - -

Other Operating Expenses 10,606 5,377

Operational lease expenses 1,315 520

Repair and maintenance expenses 313 49

Advertisement expenses 56 84

Other expenses 8,922 4,724

Loss on Sale of Assets - -

Other* 19,739 17,007

Total 41,331 30,580

* Other comprised of the expenses amounting TRY 413 based on the service agreemen t signed with Deutsche

Bank Group, foreign exchange losses on foreign currency indexed loans amounting TRY 4,945, tax and duty

expenses amounting TRY 2,305 and short-term employee benefits amounting TRY 5,847 YTL.

8. Profit/loss before taxes

The Bank's profit before tax is increased by 50%compared to prior year.and reached to TRY 54,111.

9. Provision for taxes

9.1 Current tax benefit or charge and deferred tax benefit or charge

The current tax charge of the Bank is TRY 9,795 and the deferred tax income is TRY 970 as of December 31, 2006.


9.2 Deferred tax charge arising from origination or reversal of temporary differences

Deferred tax income amounting TRY 970 is arising from the temporary differences between the tax legislations and

the applied accounting and measurement policies.

9.3 Deferred tax charge/benefit arising from the temporary differences, tax losses or tax exemptions

The deferred tax income is completely arised from the temporary differences as of December 31, 2006.

10. Operating profit/loss after taxes

The Bank's profit after tax is increased by 82%compared to prior year.and reached to TRY 45,286.

11. Net profit and loss

11.1 Any further explanation on operating results needed for proper understanding of the Bank'sperformance

The main operations of the Bank are, interbank money market transactions, purchasing and selling marketable

securities, foreign currency transactions and providing collateralized non-cash loans. Therefore net interest

expense, net trading account income, net foreign Exchange gain and fees and commission income on non cash

loan have considerable balances on the Bank's income statement.

Current Period Prior Period-Net interest expense: 75,138 65,284

-Trading account income, net: 135,938 131,617

-Foreign exchange gain, net: 3,227 6,527

-Comission income on non-cash loans 1,024 1,252

11.b Any changes in estimations that might have a material effect on current and subsequent period results

None.

11.c Gain or loss on minority interests

None.





90

12. Components of other items in income statement, as each sub-account exceeding 20%of the totalseperately, exceeding 10%of total income statement

There isn't any item, other than the items explained in note IV.5 and IV.7, exceeding 10%of the total profit.

V. Statement of Changes in Shareholders' Equity

1. Information on share capital:

The main shareholders and share capital structure of the Bank as of December 31, 2006 are as follows:

Name/Trade Name Shares Ownership Paid-in Capital Unpaid PortionDeutsche Bank AG 30,000 100.00 30,000 -Total 30,000 100.00 30,000 -

During the period there has been a share capital increase amounting TRY 10,000 thousands from the extraorindaryreserves. This share capital increase has been declared on Trade Registry Gazette dated November 27, 2006.

2. Information on securities value increase fund (increases)

None.

3. Information on increases on cash flow hedging reserves

None.

4. Reconciliation of the beginning and ending balances of the foreign currency differences

There aren't any foreign currency differences recognized under shareholders' equity in the current year.

5. Information on securities value increase fund (decreases)

None.

6. Dividends

6.a Any dividends declared after the balance sheet date but before the announcement of the financialstatements

The Bank hasn't made the earnings per share calculation to be approved in the General Assembly as of thereporting date. Therefore, a profit distribution table is not presented on the accompanying financial statements.Earnings per share, presented on the accompanying income statement, is calculated by dividing the net income forthe period to the total number of shares as the balance sheet date.

6.b Earnings per share to be distributed to shareholders after the balance sheet date

The Bank hasn't made the earnings per share calculation to be approved in the General Assembly as of thereporting date as explained above.


7. Transfers to legal reserves

TRY 204 is transferred from retained earnings to legal reserves in the current period.

8. Compensation of prior period losses

None.

VI. Statement of cash flows

1. Disclosures for “other” items in statement of cash flows and effect of change in foreign currency rateson cash and cash equivalents

The “others” account included in “operating profit before changes in operating assets and liabilities” are comprisedof fees and commission expenses, provision for losses on loans and other receivables and gain/loss on netmonetary position. The “net increase/ (decrease) in other liabilities” account in “changes in operating assets andliabilities” is comprised of the changes in miscellaneous liabilities, other liabilities, taxes and duties payable,provision expenses for employee benefits and other provisions. The “others” account included in “net cash flowfrom financing activities” in section III in the table, is the amount of cash flow from gains and losses on capitalmarket transactions. “Effect of change in foreign exchange rate on cash and cash equivalents” in the section IV iscomprised of the foreign exchange gain/loss reflected in the Bank's income statement.

2. Cash outflows from acquisition of investments, associates, subsidiaries and other investments

None.

3. Cash inflows from disposal of investments, associates, subsidiaries and other investments

None.

4. Cash and cash equivalents at beginning of period

As of December 31, 2006 and 2005, cash and cash equivalents is comprised of balances with Central Bank ofTurkey with remaining maturities less than 3 months, reserve deposits, banks and other financial institutions andmoney market placements with remaining maturities less than 3 months.

Current Period Prior PeriodCash on Hand - -Cash Equivalents 42,901 15,689

Cash and Balances with Central Bank 1,181 188Trading Securities 38,612 13,428Banks and Other Financial Institutions - 1,000Money Market Placements 3,538 1,073Reserve Deposits - -





92

5. Cash and cash equivalents at the end of period

Current Period Prior PeriodCash on Hand - -

Cash Equivalents 100,245 42,902

Cash and Balances with Central Bank 41,829 1,181

Banks and Other Financial Institutions 3,474 38,613

Money Market Placements 50,000 -

Reserve Deposits 4,942 3,558

6. The Bank does not have any restricted cash and cash equivalents due to legal limitations or any other reasons.

7. There isn't any additional information.

VII. The Bank's risk group

1. Transactions with the Bank's risk group; lendings and deposits and other related party transactionsoutstanding at period end and income and expenses from such transactions incurred during the period

1.1 Current Period:

Investments, Bank's Direct and OtherAssociates and Indirect Components in

Bank's Risk Group (*) Subsidiaries Shareholders Risk GroupCash Non-cash Cash Non-cash Cash Non-cash

Loans and Other Receivables

Balance at beginning of period - - 43,984 - 973 -

Balance at end of period - - 6,502 - 1,545 -

Funds Borrowed

Balance at beginning of period - - - - - -

Balance at end of period - - - - - -

Interest and Commission Income - - 16,258 - 1,545 -

Interest and Commission Expense - - 47,496 - - -

(*) As described in the Article 49, clause (2) of Turkish Banking Law No. 5411


1.2 Prior Period:


Bank's Risk Group (*) Subsidiaries Shareholders Risk GroupCash Non-cash Cash Non-cash Cash Non-cash

Loans and Other Receivables

Balance at beginning of period - - 15,444 - - -

Balance at end of period - - 44,957 - - -

Funds Borrowed

Balance at beginning of period - - - - - -

Balance at end of period - - - - - -

Interest and Commission Income - - 8,227 - - -

Interest and Commission Expense - - 37,346 - - -


1.3 Deposits:


Bank's Risk Group (*) Subsidiaries Shareholders Risk GroupCurrent Prior Current Prior Current Prior

Period Period Period Period Period PeriodDeposit

Balance at beginning of period - - - - 20,892 606

Balance at end of Period - - 36,510 - 22,643 20,892

Interest Expenses - - - - - -






94

1.4 Derivative transactions:


Bank's Risk Group (*) Subsidiaries Shareholders Risk GroupCurrent Prior Current Prior Current Prior

Period Period Period Period Period PeriodTrading Transactions(**)

Beginning of Period - - 1,303,043 421,337 - -

End of Period - - 1,176,073 1,303,043 - -

Total Profit / Loss - - 17,245 20,705 - -

Hedging Transaction

Beginning of Period - - - - - -

End of Period - - - - - -

Total Profit / Loss - - - - - -


(**) Trading transactions comprised of accrued gains on derivatives amounting TRY 1,238 and TRY 5,811 for the

current and the prior year, respectively.

2. The Bank's risk group

2.1 Relations with companies in risk group of/or controlled by the Bank regardless of nature of currenttransactions

The Bank enters into various banking transactions with the group companies. These transactions are performed for

commercial purposes and on an arm's length basis.


2.2 Concentration of transaction volumes and balances with risk group and pricing policy

% According to the Amounts in the

Amount Financial StatementsBanks and other financial institituons 3,081 36%

Loans under follow-up - -

Non-cash loans 96,558 48%

Fund borrowed - -

Deposits 23,736 5%

Interest income on banks 215 22%

Funds borrowed 46,588 100%

Fees and commissions received 3,260 49%

Fees and commissions paid 557 22%

Other operating income 14,598 53%

Other operating expense 351 1%

Terms of transactions made with group companies are set in accordance with the market conditions.

2.3 There are no other matters not required to be disclosed separately

2.4 Transactions accounted under equity method

None.





96

2.5 All kind of agreements signed for asset purchases/sales, service rendering, agencies, leasing, researchand development, licences, funding, guarantees, management services

The Bank has no agreement signed for asset purchases/sales, service rendering, agencies, leasing, research and

development and licences with the group companies as of December 31, 2006.

Service agreement signed with Deutsche Bank AG includes the conditions of calculation of service fee and cost

based on the annual defined rates and transfer of the calculated amount to the service-rendering bank's account in

cash, for intermediary services performed by Bank's sales executives in the transactions of other group companies

and intermediary servies performed by sales executives of other group banks. As of December 31, 2006, service

fee calculated as TRY 2,852 is included in “Other Accrued Interest and Income” in the Bank's balance sheet, while

service cost amounting TRY 289 is included “Other Provisions”.

In accordance with the agreement signed with Deutsche Bank AG ,which is valid since January 2004, the Bank

pays a service fee to Deutsche Bank AG in return for global and regional management, leadership and coordination

activities provided to the Bank by the top management of Deutsche Bank AG. As of December 31, 2006, this

service fee amounting TRY 351 is included in “Other Provisions” on the Bank's balance sheet and “Other

Operating Expense” on the income statement. In accordance with the signed with Bebek Varl›k Yönetimi Afi, which

is valid since January 2005, Bebek Varl›k Yönetimi Afi pays a service fee to the Bank in return for the operational

services that is provided by the Bank. As of December 31, 2006, this service fee amounting TRY 892 is included in

“Other Accrued Interest and Income” on the Bank's balance sheet and “Other Operating Income” on the income

statement .

Deutsche Bank's Turkey Representative Office pays a monthly fixed amount to the Bank, in return for the services

provided through the Bank's staff and similar services, in the framework of the signed agreement. As of December

31, 2006, this service fee amounting TRY 45 is included in “Other Operating Income” on the income statement.

In accordance with the agreement signed with Deutsche Bank AG, which is valid since January 2005, Deutsche

Bank AG pays a service fee to the Bank in return for the services related to financial sector cash management

products. As of December 31, 2006, this service fee amounting TRY 375 is included in “Other Accrued Interest and

Income” on the Bank's balance sheet and “Other Operating Income” on the income statement.


In accordance with the agreement signed with Bebek Varl›k Yönetimi Afi, which is valid since January 2005, Bebek

Varl›k Yönetimi Afi pays a service fee to the Bank in return for the operational services that is provided by the Bank.

As of December 31, 2006, this service fee amounting TRY 882 is included in “Other Accrued Interest and Income”

on the Bank's balance sheet and “Other Operating Income” on the income statement.

Deutsche Securities Menkul De¤erler Afi benefits from the Bank's employees and similar services and hence pays

in return for these services to the Bank in the framework of the signed agreement. As of December 31, 2006, this

service fee amounting TRY 210 is included in “Other Operating Income” on the income statement.

VIII. Domestic, foreign and off-shore branches and foreign reprensentative offices

1. Information on domestic and foreign branches and foreign reprensentative offices

None.

IX. Significant events and matters arising subsequent to balance sheet date

1. Significant events and matters arising subsequent to balance sheet date and their financial statementeffects

None.





98

SECTION SIX

I. Other Disclosures on Activities of the Bank

None.

SECTION SEVEN


I. Disclosures on Independent Auditors' Report

The Bank's unconsolidated financial statements as of December 31, 2006, have been audited by Akis Ba¤›ms›z

Denetim ve Serbest Muhasebeci Mali Müflavirlik Afi (the member firm of KPMG International) and an unqualified

opinion has been issued in their independent auditors' report dated February 23, 2007. Independent auditors' report

is presented in the beginning of this report.

II. Disclosures prepared by Independent Auditors

None.

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