Supplemental Letter No. 1 T. VAKIFLAR BANKASI T.A.O. September 17, 2014 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Loan No. 7904-TU (Second Access to Finance for Small and Medium Size Enterprises Project) Performance Monitoring Indicators Dear Sirs and Mesdames: This refers to the provisions of paragraph I of Section II.A. of Schedule 2 to the Loan Agreement of even date between the International Bank for Reconstruction and Development (the Bank) and T. Vakiflar Bankasi T.A.O.(the Borrower) for the above-captioned Project. The Borrower hereby confirms to the Bank that the indicators set forth in the attachment to this letter shall serve as a basis for the Borrower to monitor and evaluate the progress of the Project and the achievement of the objectives thereof. Very truly yours, T. VAKIFLAR BANKASI T.A.O. Byy / Authorized Representative By_ Authorized RepresentaYives Attachment Attachment to Supplemental Letter No I RESULTS FRAMEWORK AND MONITORING INDICATORS Core Indicators for World Bank Group MSME Finance Support Monitoring Baseline at Actual During Target at MSME Indicators Appraisal Supervision Completion 1. Volume of Bank Support: Lines of Credit- SME 0 199.50 (US$ million) 2. Outreach: 40,000 40,075 (i) Number of active SME loan accounts (ii) Outstanding SME loan. portfolio (US$ million) 2,800 3,000 3. Portfolio Quality: Portfolio-at-risk PAR (NPL) 6.1 n/a 4. Financial Sustainability: Return on Assets (%) 1.98 n/a Additional Indicators to be Monitored by Participating Banks ** Values Data Collection and Reporting Indicators YR1 YR2 YR3 YR4 Frequency Data Collection Responsibility of Reports Instruments Profile of SMEs financed under the proiect PBs (including based on Size of SMEs -- -- annual Loan applications information and project reports provided by Economic sector SMEs and PFIs). Geographical location Exports Profile of finance provided under the pro*ect PBs (including annual Project reports based on Size of sub-loans -- information provided by Maturity of sub- PFIs). loans Interest of sub-loans ** For monitoring and analytical purposes only. No projections are required at project inception. Monitoring report of project's overall indicators- Vakif Bank Base Line YR1 YR2 YR3 YR4 YR5 YR6 (in US$ Million) 2009 2010 2011 2012 2013 2014 2015 1. Data on SME II Project Total loans disbursed 0 199.50 Total loans In priority 0 30 regions Total loans outstanding 0 Total loans outstanding in 0 the priority regions Total non-performing loans n/a <7 (in percent) Total non-performing loans n/a in the priority regions (in percent) Number of SMEs financed 0 75 under the project Number of SMEs financed 0 in the priority regions Number of provinces with 0 active SME clients financed under the project Increase in employment in n/a >0 beneficiary SMEs Increase in sales in n/a >0 beneficiary SMEs II. Data on Vakif Bank Total number of SMEs 40,000 funded by Vakif Bank Amount of funding to 2,800 SMEs by Vakif Bank I/ Share of funding to SMEs 14.5 by Vakif Bank ( % of Total Loans ) I/ SME outstanding portfolio in that year