VAKIFBANK
2015 ANNUAL REPORT
126
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE NOTE I. OF SECTION THREE
TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI
UNCONSOLIDATED FINANCIAL REPORT
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
Information on foreign currency transactions
Foreign currency transactions are recorded in TL which is the functional currency of the Bank. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated into Turkish Lira by using the prevailing exchange. Non-monetary foreign currency items which are
recorded at fair value are valued at historical foreign exchange rates. Foreign exchange gain/loss amounts due to conversion of monetary items or
collection or payments foreign currency denominated transactions are recognized in income statement.
Foreign exchange differences resulting from amortized costs of foreign currency denominated available-for-sale financial assets are recognized in
the statement of income whilst foreign exchange differences resulting from unrealized gains and losses are presented in “valuation differences of
marketable securities” under equity.
If the net investments in associates and subsidiaries operating in foreign countries are measured at cost, they are reported as translated into TL by
using the foreign exchange rate at the date of transaction. If related associates and subsidiaries are measured at fair value, they are reported as
translated into TL by the rates prevailing at the date of the determination of the fair value.
III. INFORMATION OF ASSOCIATES AND SUBSIDIARIES
Subsidiaries are the entities that the Bank has the power to govern the financial and operating policies of those so as to obtain benefits from its
activities. Subsidiaries are accounted in accordance with TAS 39 – Financial Instruments: Recognition and Measurement in the unconsolidated financial
statements. Subsidiaries, which are traded in an active market or whose fair value can be reliably measured, are recorded at fair value.
Associates are accounted in accordance with TAS 39 - Financial Instruments: Recognition and Measurement in the unconsolidated financial statements.
Associates, which are traded in an active market or whose fair value can be reliably measured, are recorded at their fair values. Associates which
are not traded in an active market and whose fair values cannot be reliably set are reflected in financial statements with their costs after deducting
impairment losses, if any.
IV. INFORMATION ON FORWARDS, OPTIONS AND OTHER DERIVATIVE TRANSACTIONS
The derivative transactions mainly consist of currency and interest rate swaps, precious metals swaps, foreign currency forward contracts and
currency options. The Bank has classified its derivative transactions, mentioned above, as “trading purpose” in accordance with the TAS 39 – Financial.
Instruments: Recognition and Measurement.
Derivatives are initially recorded at their purchase costs. The notional amounts of derivative transactions are recorded in off-balance sheet accounts
based on their contractual amounts.
Subsequent to initial recognition derivative transactions are measured at their fair value and, if the fair value is positive, it is recorded in the balance
sheet under “Derivative financial assets held for trading purpose” or if the fair value is negative, it is recorded in the balance sheet under “Derivative
financial liabilities held for trading purpose”. As the result of related measurements to fair value changes of derivative transactions are recognized in
the statement of income.
V. INFORMATION ON INTEREST INCOME AND EXPENSES
Interest income and expense are recognized according to the effective interest method based on accrual basis. According to the TAS 39 - Financial
Instruments: Recognition and Measurement, effective interest rate is the rate that discounts the expected cash flows of financial assets or liabilities
during their lifetimes to their carrying values. Effective interest rate is calculated when a financial asset or a liability is initially recorded with
transactions costs and is not modified thereafter.
In accordance with Regulation on Identification of and Provision against Non-Performing Loans and Other Receivables, the accrued interest income on
non-performing loans are reversed and subsequently recognized as interest income only when collected.
VI. INFORMATION ON FEES AND COMMISSIONS
Banking service income is recorded as income when they are collected. Other fee and commission income are transferred to profit/loss accounts
according to the principle of periodicity on the basis of accrual using the principle of the effective interest method. Fee and commission expenses are
recorded as expense at the time they are paid.
