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PART III: FINANCIAL HIGHLIGHTS AND RISK MANAGEMENT
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.)
VII. INFORMATION ON FINANCIAL ASSETS AND FOOTNOTES
A financial asset is any asset that is cash, an equity instrument of another entity, a contractual right to receive cash or another financial asset from
another entity; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favorable to the entity.
Financial assets except for measured at fair value through profit or loss are recognized initially with their transaction costs that are directly attributable
to the acquisition or issue of the financial asset. Purchase and sale transactions of securities are accounted at settlement dates.
According to TAS 39 – Financial Instruments: Recognition and Measurement, financial assets are classified in four categories; as financial assets at fair
value through profit or loss, available-for-sale financial assets, held-to-maturity investments, and loans and receivables.
Financial assets at fair value through profit or loss
The financial assets included in this group are, "Trading financial assets” and “Financial assets at fair value through profit or loss classified as financial
assets" as it is divided into two separate titles.
Financial assets held for trading are trading financial assets and are either acquired for generating profit from short-term fluctuations in the price or
dealer’s margin, or are the financial assets included in a portfolio in which a pattern of short-term profit making exists independent from the acquisition
purpose.
Financial assets at fair value through profit or loss classified as financial assets are financial assets which are not acquired for trading, however during
initial recognition with transaction costs and classified as fair value through profit or loss. Such an asset is not present in our Bank’s portfolio.
Both assets are measured at their fair values and gain/loss arising is recorded in the statement of income. Interest income earned on financial assets
and the difference between their acquisition costs and fair values are recorded as interest income in the statement of income. The gains/losses in case
of disposal of such securities before their maturities are recorded under trading income/losses in the statement of income.
Available-for-sale financial assets
Available-for-sale financial assets are the financial assets other than loans and receivables, held-to-maturity investments and financial assets at
fair value through profit or loss. Available-for-sale financial assets are initially recorded at cost and subsequently measured at their fair values.
However, assets that are not traded in an active market are measured by valuation techniques, including recent market transactions in similar
financial instruments, adjusted for factors unique to the instrument being valued; or discounted cash flow techniques for the assets which do not
have a fixed maturity. Unrecognized gains or losses derived from the difference between their fair values and the discounted values are recorded in
“Valuation differences of the marketable securities” under the shareholders’ equity. In case of disposal of such assets, the valuation differences under
shareholder’s equity are transferred directly to the statement of income.
Held to maturity investments
Held to maturity investments are the financial assets with fixed maturities and pre-determined payment schedules that the Bank has the intent and
ability to hold until maturity, excluding loans and receivables. Held-to-maturity investments are measured at amortized cost using effective interest
method after deducting impairments, if any.
Financial assets classified as held to maturity investment however sold before its’ maturity or reclassified, are not allowed to be classified as held to
maturity investment for two years with respect to TAS 39 rules. There are no financial assets in the Bank’s portfolio contradictory to the standard.
Held-to-maturity investments, subsequent to initial recognition, are measured at amortized cost using effective interest method after deducting
impairments, if any.
Loans and receivables
Loans and receivables
are the financial assets raised by the Bank providing money, commodity and services to debtors. Loans are financial assets with
fixed or determinable payments, which are not quoted in an active market and not classified as a securities.
Loans and receivables are initially recognized with their purchase and carried at their amortized costs using the internal rate of return at the subsequent
recognition.
