Türkiye Is Bankasi : Integrated Annual Report

2021 Integrated

Annual Report

for an

Inclusive and

Robust Economy

for Climate

Actionfor Our

Employees

for Next-

forGeneration

TransparentBanking Management

for Efficient

Operations

for Future

Generations

We take responsibility...

#ourworldourfuture

Contents

10 İşbank's Vision, Goals, Values and Strategy

THE FUTURE

146

150 Information on Risk Management Policies Applied per Risk Types

154 Audit Committee's Assessment on the Operation of Internal Audit, Internal Control, Compliance and Risk Management Systems, and Information on its Activities in the Reported Period

163

170

Guidance

Completed

Project

Uncompleted

Project

Ongoing

Project

06 50

109 133

Information in
different sections		PRODUCED	FINANCIAL
or reports
	CAPITAL	CAPITAL
Information on
the website		SOCIAL-RELATIONAL				HUMAN
		CAPITAL				CAPITAL
Redirects to
Contents page		INTELLECTUAL
	NATURAL
		CAPITAL	CAPITAL

52 We Take Responsibility for an Inclusive and Robust Economy

110 We Take Responsibility to Mitigate Negative Impacts of Our Operations

Employees

181

188

189

190Annual Meeting Documents

191

192

194

196

196

Pandemic

202

207

310

428

428

432 Activities for which Support Services are Received in Accordance with the Regulation on Procurement of Support Services for Banks

434

436 Information on Transactions Carried out with the Bank's Risk Group

436

437 Fundings Received from International Financial Institutions by İşbank as of 31.12.2021

438

442

443

446

447

451

452

457

458

460

of Directors' Annual Report

462 Non-Financial Data Reporting Guidance and Independent Assurance Report

An Overview of İşbank		Looking into the Future		How We Create Value

Introduction

Reliable Financial Actor		Responsible Operations		Good Corporate Citizen		Financial Reports and Annexes

About the Report

"We Take Responsibility..."

İşbank has set out the theme of its first integrated annual report as "We Take Responsibility". Preparing to celebrate its 100th anniversary in 2024 and continuing to work with the vision of "The Bank of the Future", İşbank has always provided permanent support to the country's economy since the day it was founded.

The economic and social difficulties caused by the COVID-19 pandemic, the increasing adverse effects of climate change, and income inequality have affected Turkey as well as the rest of the world. Many organizations, families and individuals have had to face both financial and moral difficulties in this period. An inclusive, low-carbon and innovative economy has become more urgent than ever. During this process of change, the banking sector plays an important role. İşbank is aware of its duties and responsibilities in this regard. In line with its historical mission, the Bank operates with the aim of becoming a reliable partner that focuses on the welfare of all segments of society with innovative and creative economic growth target which is respectful of natural life balance.

2021 Integrated Annual Report aims to shed light on the vision of how the value creation model, which is called İşbank Banking, will be managed in this transition period. 2021 report summarizes the Bank's approach to taking responsibility and the value creation for its stakeholders in four main sections.

The "How Do We Create Value?" section explains the value creation process through İşbank Banking, which reflects İşbank's integrated sustainability approach. This section includes the sustainability priorities revised in 2021, sustainability initiatives supported, communication with stakeholders and contribution to United Nations Sustainable Development Goals.

The "Reliable Financial Actor" section presents the role that İşbank plays as a financial organization for an inclusive and robust economy. This section includes the changes anticipated

by the financial sector and İşbank's goals for a sustainable financial performance, the customer experience that İşbank considers while presenting its products and services, and its performance in inclusion, financial literacy, raising savings awareness, as well as İşbank's roles and targets in climate action. The final part of the Reliable Financial Actor section includes İşbank's digitalization journey and the performance in this field.

The "Responsible Operations" section sets out the projects and practices developed by İşbank to minimize the negative environmental impacts of its operations and extend the working standards of the Bank throughout the supply chain. This section also reports the responsibilities İşbank takes for its employees, how İşbank employees are getting prepared for the banking competencies of the future, and the Bank's gender equality approach.

The "Good Corporate Citizen" section summarizes the Bank's corporate governance structure, ethical and responsible banking approach, management principles, and performance. The "We Take Responsibility for Future Generations" section presents a summary of İşbank's vision of corporate social responsibility and projects realized in line with this vision. Effects of the COVID-19 pandemic continued all over the world in 2021. The measures taken by İşbank for its employees and customers within the scope of the pandemic are also reported in a separate section in the report.

İşbank has positioned sustainability, which is the basis of its business model, as one of the main focal points of its corporate strategy with a holistic approach. As an indicator of this approach, the Bank has prepared its first Integrated Annual Report, which includes a comprehensive evaluation of its financial and non-financial performance in 2021. İşbank, which completed 2021 with success despite all the global turmoil, shall continue to take into consideration economic, social and environmental effects of its activities and take responsibility for the country's economy as a reliable institution.

İşbank prepared its first Integrated Annual Report in 2021.

This report aims to shed light on the responsibilities İşbank has taken in the rapidly changing new economic system.

Structure and content of the report

İşbank's first integrated annual report provides up-to-date information about the Bank's activities carried out with its approach focusing on creating sustainable and shareable value by taking into consideration financial and non-financial capital elements together. The 2021 Integrated Annual Report includes İşbank's 2021 performance, the value created for all of its stakeholders with this performance, the risks and opportunities it has faced in the value creation process, and the integration of the Bank's sustainability priorities into business model.

A separate section has been created in the report in order to explain the measures taken in the fields of employee health, customer service, and business continuity with regards to the Coronavirus (COVID-19) pandemic that continued to impact the whole world in 2021.

See Fight Against COVID-19

Period and scope of the report

The İşbank 2021 Integrated Annual Report presents the Bank's performance for the period between January 1st, 2021 and December 31st, 2021. The Integrated Annual Report includes consolidated and unconsolidated financial statements and independent audit report. The scope of the report covers İşbank's activities in Turkey and operations abroad. The activities of the Bank's subsidiaries are not included in the scope of reporting.

Compliance and legislation

İşbank, which is publicly traded on Istanbul Stock Exchange, ensures that the Bank's 2021 Integrated Annual Report is in compliance with the minimum requirements of the Banking Regulation and Supervision Agency (BRSA) and the Capital Markets Board (CMB) on annual reporting.

The İşbank Integrated Annual Report is compatible with the Integrated Reporting Framework ( Framework) of the International Integrated Reporting Council (IIRC). The 2021 Integrated Annual Report has been prepared in accordance with the GRI Standards-Comprehensive practice published by the Global Reporting Initiative (GRI).

See GRI Standards Content Index

In organizing the content of report, the Provisional Standard for Commercial Banks guide released by the Sustainability Accounting Standards Board - SASB, United Nations Environment Program Finance Initiative's (UNEP-FI) Principles for Responsible Banking, and Carbon Disclosure Project's (CDP) Climate Change Program Guidance were utilized.

The report also includes İşbank's contribution to the United Nations Sustainable Development Goals.

See Contribution to Sustainable Development Goals.İşbank, a signatory of the United Nations Women's Empowerment Principles (UN WEPs), has prepared detailed performance summary on gender equality. The Bank's performance in this area can be found in the Women's Empowerment Principles Progress Statement. See Women's Empowerment

Principles Progress Statement

Audit

The financial statements included in İşbank's 2021 Integrated Annual Report have been audited by Güney Bağımsız Denetim ve SMMM A.Ş. See Compliance OpinionKPMG Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. has provided limited assurance on selected non-financial information. See Independent Assurance Reportİşbank's Environmental Management System has been audited within the scope of ISO 14001: 2015 standard under DAkkS accreditation by TÜV SÜD.

Senior management statement

In the opinion of İşbank's senior management, this report includes all the topics in terms of value creation for the Bank's stakeholders while presenting a holistic evaluation of the Bank's financial and non-financial performance for the period between January 1st, 2021 and December 31st, 2021 and its plans for the future. The statement of responsibility regarding this report has been prepared as per the relevant legislation and presented on the KAP platform. The statement can be found on the Bank's corporate website.

Contact

The report is accessible via the Public Disclosure Platform

(KAP) and onwww.isbank.com.tr

Please send your opinions and suggestions on the report to [e-mail].

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An Overview of İşbank

An Overview of İşbank		Looking into the Future		How We Create Value

Corporate Profile

Reliable Financial Actor		Responsible Operations		Good Corporate Citizen		Financial Reports and Annexes

Widespread Shareholding Structure		Deep-Rooted Banking Tradition

As one of the most reliable financial institutions in Turkey, İşbank plays a role in building the financial futures of millions of customers through its digital service channels and service network throughout the entire country.

Having a widespread shareholder base, İşbank has approximately 175 thousand shareholders, consisting of institutional and individual investors. 37.26% of the Bank's capital is owned by İşbank Members' Supplementary Fund, the members of which are around 49 thousand employees and retirees.

İşbank, the first national bank of the Turkish Republic, was founded on August 26, 1924 in line with the decisions taken at the İzmir First Economics Congress by directives of Atatürk.

Since the day it was founded, İşbank has been a brand synonymous with trust, dignity and reputation in the eyes of its stakeholders in national and international markets.

İşbank, an organization synonymous with trust, consistency and dignity, works for an inclusive and environment-friendly economy with its sense of responsibility stemming from its history.

As of the end of 2021, with 22,802 employees providing service to 20.7 million customers, İşbank is the largest private bank in Turkey with its total asset size of TL 926.6 billion. İşbank is amongst the most highly respected institutions of

İşCep (the mobile app), Call Center, 6,476 ATMs in Turkey and the Turkish Republic of Northern Cyprus (TRNC), and 570,212 POS devices (including online POS).

İşbank carries out cross border banking activities with 2 branches in Iraq, 2 branches in Kosovo, 2 branches in the UK, 1 branch in Bahrain and 14 branches in the TRNC as of the end of 2021. The Bank has 2 representative offices, one in Shanghai (China) and the other one in Cairo (Egypt). In addition

İşbank's Shareholding Structure**

Atatürk Shares*	Free Float
28.09%	34.65%

Having undertaken pioneering roles and critical duties in economic life based on its founding mission, the Bank has not hesitated to take responsibility in difficult times. İşbank creates permanent value for its stakeholders in the medium and long term, as it does in the short term, with its deep-rooted and powerful business model.

the banking sector with its products and services in corporate, commercial, SME, retail and private banking.

İşbank provides services to its customers with 62 Regional Directorates and 1,174 branches in Turkey in addition to the Head Office in Istanbul, Tuzla Technology and Operations Center (TUTOM), Tuzla Atlas Data Center, and Ankara Operations Center (ATOM).

Providing service through its branches and digital channels developed as a result of huge investments, İşbank continues to create value for its customers through its Internet Branch,

20.7

million Customers

22,802

Employees

The biggest private bank in Turkey with total assets of

TL 926.6billion

to aforementioned, İşbank carries out banking activities via its subsidiaries in Germany, Russia and Georgia.

İşbank Group is an integrated organization with domestic and international subsidiaries operating in many fields. As of the end of 2021, İşbank holds direct and indirect shares in 132 companies. The number of companies controlled directly or indirectly by the Bank is 109.

For detailed information, please see Subsidiaries on page 63 and Direct and Indirect Subsidiaries on page 64.

Strong and Sustainable Financial Structure

İşbank has a strong, resilient and agile financial structure. As of the year-end 2021, İşbank's shareholder equity amounts to TL 86.8 billion and its capital adequacy ratio is 20.4%, well above the legal limit. The Bank reinforces its support to its customers by taking advantage of the opportunities created by its sustainable and strong financial structure.

İşbank Members' Supplementary Pension Fund

37.26%

*These shares belong to Atatürk and are represented by the Republican People's Party in accordance with Atatürk's will. Since the dividend income of these shares was left to the Turkish Linguistic Society and Turkish Historical Society in accordance with Atatürk's will, dividend payments are made to the aforementioned institutions within the framework of the will and legal framework.

**The shareholding structure is provided as of 31.12.2021. (31.12.2020: Pension Fund 37.08%, Atatürk Shares 28.09%, Free float 34.83%).

Innovative Banking for 97 Years

İşbank has been operating in Turkey for 97 years with its sustainable and robust financial structure.

Celebrating its 97th year in 2021, the Bank carries out its activities in line with the vision of developing innovative products, services and applications that meet the banking expectations of the future through pioneering practices within the sector.

There are many innovations that İşbank has introduced to the banking sector. Introducing the first ATMs to Turkey, İşbank's ATM named "Bankamatik" has become a brand. İşbank was the first bank in Turkey to offer the Internet branch and mobile banking application to its customers. Increasing its investments in technology every year, İşbank has also made a difference in the sector in next-generation digital banking applications.

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