VKF_FRAE_2017

PART I: INTRODUCTION 16 VakıfBank Annual Report 2017 COMPLIANCE OPINION ON THE ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT ON THE BOARD OF DIRECTORS’ ANNUAL REPORT To the Board of Directors of Türkiye Vakıflar Bankası Türk Anonim Ortaklığı: 1- Opinion We have audited the annual report of the Türkiye Vakıflar Bankası T.A.O. (“Bank”) and consolidated subsidiaries of it for the accounting period of 1 January 2017-31 December 2017. In our opinion, the financial statements included in the Board of Directors’ annual report and the Board of Directors’ assessments on the Bank based on the audited financial statements, in all material respects, are accurate and consistent with the full set of consolidated and non-consolidated financial statements subject to audit, and the information we collected during our independent audit. 2. The Basis of Our Opinion Our independent audit process was in compliance with Independent Audit Standards (“BDS”), a part of the Turkish Audit Standards issued by Public Oversight Accounting and Auditing Standards Authority (“KGK”), and the “Regulation on the Independent Audit of Banks” issued on the Official Gazette dated April 2, 2015 and numbered 29314. Our responsibilities as per these standards are explained in detail in our report’s section titled Independent Auditor’s Responsibility in the Independent Audit of the Annual Activity Report. In line with KGK’s Code of Ethics for Independent Auditors (“Code of Ethics”) and the ethical provisions contained in the legislation on independent audit, we declare that we are independent of the Bank. We have also fulfilled our other ethical responsibilities as per the Code of Ethics and applicable legislation. We believe that the independent audit evidence we have collected during the independent audit provide an appropriate and sufficient basis to allow us formulate an opinion. 3. Our Audit Opinion on the Full Set of Consolidated and Non-Consolidated Financial Statements We have expressed a limited positive opinion in our audit reports dated March 2, 2018 and February 13, 2018, regarding the Bank’s full set of consolidated and non-consolidated financial statements for the period January 1, 2017 through December 31, 2017, respectively. 4. Board of Directors’ Responsibility for the Annual Activity Report As per Article 514 and 516 of the Turkish Commercial Code numbered 6102, Capital Markets Board’s (CMB) Communique numbered II-14.1 on Principles of Financial Reporting in Capital Markets (“Communique”), and “Regulation on the Methods and Principles for the Preparation and Publication of Annual Reports by Banks” issued on the Official Gazette dated November 1, 2006 and numbered 26333; the Bank management has the following responsibilities as per the annual report: a) The Bank management prepares the annual report within the first three months following the balance sheet date and presents it to the general assembly. b) It prepares the report in a way that will correctly, fully, directly, accurately and fairly represent the Bank’s activities for that year and all aspects of its financial situation. In this report, the financial situation is evaluated according to the financial statements. The report also clearly points to the Bank’s development and the potential risks it may face. The assessment of the board of directors on these matters is also included in the report. c) The annual report also includes the following: - Major events that have occurred in the company after the end of the year of activity, - The Bank’s research and development efforts, - Financial benefits to board members and top level managers, such as salaries, premiums and bonuses, as well as travel, accommodation and representation expenses, cash and in-kind benefits, insurance and similar guarantees. When preparing the annual report, the board of directors also takes into account the secondary legislation issued by the Banking Regulation and Supervision Agency, Ministry of Customs and Trade, and other related institutions. 5. Independent Auditor’s Responsibility to the Independent Audit of the Annual Report Our goal is to present our opinion and issue a report including this opinion, on whether the financial information included in the Bank’s annual report and the Board of Directors’ assessments on the Bank based on the audited financial statements are accurate and in accordance with the consolidated and non- consolidated financial statements subject to audit, and the information we collected during our independent audit, as per the Turkish Commercial Code, “Regulation on the Independent Audit of Banks” issued on the Official Gazette dated April 2, 2015 and numbered 29314, and the Communique. We conducted our independent audit in line with the BDS standards. These standards require compliance with ethical stipulations and demand that the independent audit be planned so as to provide assurance that the financial information in the annual report and the Board of Directors’ assessments on the Bank based on the audited financial statements are accurate and in accordance with the consolidated and non-consolidated financial statements subject to audit, and the information collected during the audit. PwC Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. Zeynep Uras, SMMM Partner İstanbul, March 8, 2018