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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.)
Write-down feature
If write-down, write-down trigger(s)
XS0849728190/ US90015NAB91 Not available.
XS1175854923/ US90015WAC73 available Revoking the business activity of Bank
according to 71 clause of 5411 numbered Banking Law or liquidation proceedings to
Savings Deposit Insurance Fund are the triggering events
If write-down, full or partial
XS0849728190/ US90015NAB91 not available
XS1175854923/ US90015WAC73 has full or partial write down feature.
If write-down, permanent or temporary
XS0849728190/ US90015NAB91 not available
XS1175854923/ US90015WAC73 has permanent write down feature.
If temporary write-down, description of write-up mechanism
XS0849728190/ US90015NAB91 not available
XS1175854923/ US90015WAC73 has no write-up mechanism.
Position in subordination hierarchy in liquidation (specify instrument type immediately senior to instrument)
Before debt instruments included in Tier II Capital after deposit and other receivables
Whether conditions which stands in article of 7 and 8 of Banks’ shareholder equity law are possessed or not
Possess Article 8
According to article 7 and 8 of Banks' shareholders equity law that are not possessed
Not Possess Article 7
As a part of internal capital adequacy assessment process in terms of applied approach on inherit capital requirement’s current and future
activity
Internal capital requirements assessment process and capital adequacy policies in order to define the "Internal Capital Adequacy Assessment Process
Document" was established in September 2012 and was approved by the Board of Directors. The document includes planning of capital, procedures and
principles of risk reduction procedures of capital for making emergency plans. It is aimed to specify the current and future capital requirements, capital
variety to keep up Bank’s risk or potential risks with internal capital adequacy assessment process.
In the process, potential changes in market conditions and economic cycle are evaluated for effects on capital, as well as the Bank's strategy and
credit growth expectations in line with the objectives, funding sources, liquidity opportunities are kept in into account. The Bank's strategic plans and
capital needs assessment performed in accordance with defined growth prospects in 2016 and has taken actions to increase the amount of capital and
resources in 2015.
Capital requirements for the internal assessment process, credit risk, market risk, operational risk, interest rate risk arising from the bank accounts,
liquidity risk, credit risk, residual risk, concentration risk, counterparty credit risk are taken into consideration country and transfer risk, the measurement
of risk and on the management policies and procedures have been developed and approved by the Board of Directors.
II. CREDIT RISK
Credit risk is defined as the counterparty’s possibility of failing to fulfil its obligations on the terms set by the agreement. Credit risk means risks and
losses that may occur if the counterparty fails to comply with the agreement’s requirements and cannot perform its obligations partially or completely
on the terms set. It covers the possible risks arising from futures and option agreements and other agreements alike and the credit risks arising from
credit transactions that have been defined by the Banking Law.
In compliance with the articles 51 and 54 set forth in Banking Law and ancillary regulation, credit limits are set by the Bank for the financial position
and credit requirements of customers within the authorization limits assigned for branches, regional directorates, lending departments, assistant
general manager responsible of lending, general manager, credit committee and board of directors and credits are given regarding these limits in order
to limit credit risk in lending facilities.
Credit limits are determined separately for the individual customer, company, group of companies, risk groups on a product basis. In accordance with
the related Lending Policy, several criteria are used in the course of determining these credit limits. Customers should have a long-standing and a
successful business past, a high commercial morality, possess a good financial position and a high morality, the nature of their business should be
appropriate to use the credit , possess their commercial operations in an affirmative and a balanced manner, have experience and specialization in
their profession, be able to adopt themselves to the economic conditions, to be accredited on the market, have sufficient equity capital, possess the
ability to create funds with their operations and finance their placement costs. Also the sector and the geographical position of customers, where they
operate and other factors that may affect their operations are considered in the evaluation process of loans. Apart from ordinary intelligence operations,
the financial position of the customer is mainly analyzed based on the balance sheets and the income statements provided by the loan customer,
the documents received in accordance with the related regulation for their state of accounts and other related documents. Credit limits are subject to
revision regarding the overall economic developments and the changes in the financial information and operations of the customers.
