IASINGILIZCE31122003


				Convenience Translation	Convenience Translation

ASSETS		2003	2002	2003	2002
	Note	TL Billion	TL Billion	USD Million	USD Million

Cash and amounts due from banks	4	1,636,000	2,275,571	1,172	1,630

Gold reserves	5	2,234,170	2,449,040	1,601	1,755

Placements with banks & financial institutions	6	2,767,142	4,430,299	1,982	3,174

Trading securities	7	72,131,469	81,244,536	51,676	58,205

Loans (net)	8	175,373	811,576	126	581

Available for sale investments	9	20,787	8,909	15	6

Premises & equipment (net)	10	137,867	151,015	99	108

Sundry debtors & other assets		57,025	227,228	41	163

TOTAL ASSETS		79,159,833	91,598,174	56,712	65,622

				Convenience Translation	Convenience Translation

LIABILITIES		2003	2002	2003	2002
	Note	TL Billion	TL Billion	USD Million	USD Million

Currency in circulation	11	10,675,528	8,700,211	7,648	6,233

Liabilities to Turkish Treasury	20	59,839	121,910	43	87

Due to banks & other financial institutions	12	22,563,224	24,366,925	16,165	17,457

Deposits by citizens abroad	13	26,183,270	28,881,557	18,758	20,691

Deposits by public sector		5,533,000	4,817,661	3,964	3,451

Deposits by other institutions		1,991,789	1,990,406	1,427	1,426

Liabilities for securities sold under repurchase agreements		433,645	2,365,372	311	1,695

Liabilities to International Monetary Fund	14	10,253,511	15,116,551	7,346	10,830

Corporate tax liability	18	-	-	-	-

Provisions	15	78,363	47,877	56	34

Sundry creditors & other liabilities		988,130	901,311	708	646

Deferred tax liability (net)	18	-	406,509	-	291

TOTAL LIABILITIES		78,760,299	87,716,290	56,426	62,841

SHAREHOLDERS' EQUITY
Share capital	16	40,615	40,615	29	29
Accumulated profit		358,919	3,841,269	257	2,752

TOTAL SHAREHOLDERS’ EQUITY		399,534	3,881,884	286	2,781

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		79,159,833	91,598,174	56,712	65,622

COMMITMENTS AND CONTINGENCIES	21	223,379,467	174,810,688	160,033	125,237

				Convenience Translation	Convenience Translation

		2003	2002	2003	2002
	Note	TL Billion	TL Billion	USD Million	USD Million
INTEREST INCOME
Interest income from bank placements		77,496	163,638	56	117
Interest income from marketable securities		4,872,750	7,339,523	3,491	5,258
Interest income from loans		27,768	132,348	20	95
Other interest income		83	102	-	-
		4,978,097	7,635,611	3,567	5,470
INTEREST EXPENSE
Interest expense on deposits by citizens abroad		(1,796,245)	(2,526,963)	(1,287)	(1,810)
Interest expense related to banks, financial institutions and other institutions		(4,051,474)	(5,587,118)	(2,903)	(4,003)
		(5,847,719)	(8,114,081)	(4,190)	(5,813)

NET INTEREST EXPENSE		(869,622)	(478,470)	(623)	(343)

NON-INTEREST INCOME
Income from open market operations (net)		-	869,982	-	623
Foreign exchange gains (net)		-	1,582,413	-	1,134
Dividend received		3,211	5,178	2	4
		3,211	2,457,573	2	1,761
NON- INTEREST EXPENSE
Expense from open market operations (net)		(1,042,032)	-	(747)	-
Foreign exchange losses (net)		(1,049,601)	-	(752)	-
Commission expense (net)		(44,936)	(215,592)	(32)	(154)
Other non-interest expense		(28,114)	(313,053)	(20)	(224)
		(2,164,683)	(528,645)	(1,551)	(378)

GENERAL ADMINISTRATIVE EXPENSE	17	(414,625)	(448,880)	(297)	(322)

INCOME/(EXPENSE) BEFORE MONETARY LOSS & TAXATION		(3,445,719)	1,001,578	(2,469)	718

LOSS ON NET MONETARY POSITION		(381,219)	(1,553,844)	(273)	(1,113)

LOSS BEFORE TAXATION		(3,826,938)	(552,266)	(2,742)	(395)

TAXATION		356,766	(281,464)	256	(202)

NET LOSS		(3,470,172)	(833,730)	(2,486)	(597)

	2003	2002

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss for the year	(3,470,172)	(833,730)

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation	18,722	23,235
Provisions for loan losses	30,287	43,163
Retirement pay provision and other provisions	33,303	30,203

CHANGES IN OPERATING ASSETS/LIABILITIES
Gold reserves	214,870	(172,369)
Marketable securities	9,113,067	11,023,103
Placements with banks	1,663,157	5,847,916
Loans	605,916	1,765,430
Other assets	170,203	(129,442)
Other liabilities	84,002	18,656
Currency in circularization	1,975,317	824,708
Due to banks	(1,803,701)	(4,491,044)
Deposits	(3,913,292)	4,716,585
Corporate tax	-	(525,133)
Deferred tax	(406,509)	199,218

NET CASH PROVIDED FROM OPERATING ACTIVITIES	4,315,170	18,340,499

CASH FLOWS FROM INVESTING ACTIVITIES
Change in equity participations	(11,878)	(392)
Additions to tangible fixed assets (net)	(5,574)	(5,115)

NET CASH USED IN INVESTMENT ACTIVITIES	(17,452)	(5,507)

CASH FLOWS FROM FINANCING ACTIVITIES
Receivables of Treasury	(62,071)	384,373
Liabilities to International Monetary Fund	(4,863,040)	(15,692,162)
Dividends paid	(12,178)	(4,383,999)

NET CASH USED IN FINANCING ACTIVITIES	(4,937,289)	(19,691,788)

NET DECREASE IN CASH AND CASH EQUIVALENTS	(639,571)	(1,356,796)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR	2,275,571	3,632,367

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	1,636,000	2,275,571

1. ACTIVITIES OF THE BANK

The Central Bank of the Republic of Turkey A.Ş. (the “Bank”) was incorporated in Turkey in 1931. It is established in the form of a joint stock company with the exclusive privilege of issuing banknotes in Turkey and is vested with the powers and duties set forth in Law Number 1211 of the Central Bank of the Republic of Turkey ( the “Central Bank Law”). The Head Office of the Bank is located in Ankara. The Bank now operates a nationwide network of 21 branches, 4 foreign representatives and 1 liaison office abroad. The number of personnel as at 31 December 2003 is 4,774.

2. BASIS OF FINANCIAL STATEMENTS

The accompanying financial statements have been prepared in accordance with International Financial Reporting Standards. The principal accounting policies adopted in the preparation of these financial statements are set out below:

Basis of Presentation of Financial Statements

The Bank maintains its books of accounts and prepares its statutory financial statements in accordance with Turkish Commercial Practice and Tax Legislation and Law Number 1211 of the Central Bank of the Republic of Turkey (the “Central Bank Law”). According to the 57^th and 58^th articles of the Central Bank Law, the accounting period of the Bank is the calendar year. The Bank submits to Prime Ministry, prior to the General Assembly meeting, the balance sheet and income statement along with the annual report to be prepared as of the end of each calendar year. The balance sheet is published in the Official Gazette.

The accompanying financial statements are based on the statutory records which are maintained under the historical cost convention with adjustments and reclassifications for the purposes of fair presentation in accordance with International Financial Reporting Standards (“IFRS”). In the opinion of the Bank's management, all adjustments necessary for a fair presentation of financial position, results of operations and cash flows for the period have been made in the accompanying financial statements.

Inflation Accounting

In the accompanying financial statements, restatement adjustments have been made to compensate for the effect of changes in the general purchasing power of the Turkish Lira, as of the balance sheet date, in accordance with International Financial Reporting Standard No. 29 “Financial Reporting in Hyperinflationary Economies” ("IFRS 29").

2. BASIS OF FINANCIAL STATEMENTS (cont’d)

Inflation Accounting (cont’d)

IFRS 29 became applicable to financial statements in 1990. One characteristic that necessitates the application of IFRS 29 is a cumulative three-year inflation rate approaching or exceeding 100%. Such cumulative rate in Turkey exceeded 181 % for the three years ended 31 December 2003, based on the wholesale price index announced by the Turkish State Institute of Statistics. IFRS 29 requires that financial statements be stated in terms of the measuring unit current at the balance sheet date and corresponding figures for previous periods are restated in the same terms by applying a general price index. The restatement adjustments are based on the nationwide wholesale price index ("WPI") published by Turkish State Institute of Statistics (1994=100).

The index and corresponding conversion factors for recent year ends to reach balance sheet date money values are as follows:

Index Conversion Factor

31 December 2001 4,951.7 1.4908

31 December 2002 6,478.8 1.1394

31 December 2003 7,382.1 1.0000

The comparative rates of change in the exchange rate of the Turkish Lira against the US Dollar, compared with the rates of general price inflation in Turkey according to the WPI are set out below:

Year:	2003	2002	2001	2000	1999

Currency Devaluation against US $	(14.6)%	13.5%	114.3%	24.4%	72.7%

WPI Inflation	13.9%	30.8%	88.5%	32.7%	62.9%

In the accompanying financial statements figures are presented in TL Billion. At the year end exchange rate TL 1 billion corresponds to US $ 716.42.

The principal adjustments related with inflation accounting are as follows :

· All amounts not already expressed in terms of the measuring unit current at the balance sheet date are restated by applying a general price index (the WPI). Corresponding figures for previous periods are similarly restated.

· Monetary assets and liabilities are not restated because they are already expressed in terms of the monetary unit current at the balance sheet date. Monetary items are money held and items to be received or paid in money.

2. BASIS OF FINANCIAL STATEMENTS (cont’d)

· Non-monetary assets and liabilities and the components of shareholders’ equity are restated by applying, to the initial acquisition cost and any accumulated depreciation, the relevant conversion factors reflecting the increase in the WPI from the date of acquisition or initial recording to the balance sheet date. Revaluations made on any other basis in the statutory records are eliminated.

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

· The effect of general inflation on the Bank’s net monetary position is included in the statements of income as monetary gain or loss.

3. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies followed in the preparation of the accompanying financial statements are as follows:

3.1 Accounting Convention

The accompanying financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”).

The Bank maintains its accounting records and prepares its statutory accounts in accordance with Turkish legislation and the Central Bank Law. Where these regulations differ from IFRS, certain accounts have been reclassified, combined, and in some cases recomputed, in order to comply with IFRS. As a result, in the conversion of the accounts from Turkish statutory requirements to IFRS, significant adjustments have been made to the Bank’s statements of operations, assets, liabilities and shareholders’ equity for the purposes of these financial statements.

3.2 Income and Expense Recognition

Interest and other income and expenses are recognized on the accrual basis. All income and expense items are restated in equivalent purchasing power at the balance sheet date.

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

3.3 Foreign Currency Items

Transactions in foreign currencies are translated at the rates of exchange prevailing at the dates of the transactions.

Assets and liabilities denominated in foreign currencies are translated at year end exchange rates.

All exchange gains and losses arising on settlement and translation of foreign currency items are included in the income statement.

3.4 Convenience Translation of Financial Statements

For the convenience of the reader, the balance sheet and income statement of the Bank present translations of certain Turkish Lira amounts into US Dollars of the Turkish Lira bid rate announced by the Bank. Such convenience translations are not intended to comply with the provisions of IFRS 21 (“The Effects of Changes in Foreign Exchange Rates”) or Financial Accounting Standards Board Statement 52 (“Foreign Currency Translation”) for the translation of financial statements in a highly inflationary economy.

3.5 Gold Reserves

Gold is valued at the market value based on the prices quoted on the London stock-exchange as of 31 December 2003 and on the basis of the equality of 1 ounce = 31.1035 grams.

3.6 Trading Securities

The Bank’s securities portfolio primarily represents Government Bonds and Treasury Bills issued by foreign governments and international financial institutions and issued by the Turkish Treasury. The securities portfolio also includes purchases of securities under agreements of resale (reverse repo) and repurchases of securities under agreements of sale (repo).

Securities of foreign governments and other financial institutions are stated with the market value.

	Share	Accumulated
	Capital	Profit	Total
	TL Billion	TL Billion	TL Billion

At 1 January 2002	40,615	9,058,998	9,099,613

Dividends paid	-	(4,383,999)	(4,383,999)
Loss for the year	-	(833,730)	(833,730)

At 31 December 2002	40,615	3,841,269	3,881,884

Dividends paid	-	(12,178)	(12,178)
Loss for the year	-	(3,470,172)	(3,470,172)

At 31 December 2003	40,615	358,919	399,534

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