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PART III: FINANCIAL HIGHLIGHTS AND RISK MANAGEMENT
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE I. OF SECTION THREE
TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI AND
ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
Held to maturity investments
Held to maturity investments
are the financial assets with fixed maturities and pre-determined payment schedules that the Group has the intent and
ability to hold until maturity, excluding loans and receivables.
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 Group’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 Group 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 effective interest method at the
subsequent recognition.
Foreign currency (“FC”) granted loans are recognized in original currency and is subject to evaluation with the buying rate of Turkish Lira. Foreign
currency indexed loans, are converted to Turkish Lira (TL) at the rate of the opening date and in the following periods, according to changes in period
exchange rate on the income statement in the foreign exchange gains / losses are recorded in the accounts.
VIII. INFORMATION ON IMPAIRMENT OF FINANCIAL ASSETS
Impairment loss incurs if, and only if, there is objective evidence that the expected future cash flows of financial asset or group of financial assets
are adversely affected by an event(s) (“loss event(s)”) incurred subsequent to recognition. The losses expected to incur due to future events are not
recognized even if the probability of loss is high. The matters of determination of impairment and provision must be considered within the scope of TAS
36 - Impairment of Assets.
In circumstances of impairment in financial assets at fair value through profit/loss or in financial assets available for sale, the impairment should be
recognized under “Impairment Losses on Securities” account.
In case of impairment losses on investment securities held-to-maturity occurs, the related loss amount are discounted at the original effective interest
rate of the asset's estimated future cash flows, by measuring the difference between the present value and the book value of the asset, so that it is
recognized as the book value as mentioned above.
If there is an objective evidence that certain loans will not be collected, for such loans; the Group provides specific and general allowances for loan and
other receivables classified in accordance with the “Regulation on Identification of and Provision against Non-Performing Loans and Other Receivables”
published on the Official Gazette no. 26333 dated 1 November 2006 and the amendments to this regulation.
20% specific provision for non performing loans for Third Group and 100% specific provision for non performing loans for Fourth and Fifth Group used to
be reserved on condition of not being less than the minimum required rates specified within the related Regulation, 50% specific provision is reserved
for the non performing loans that are transferred to Fourth Group according to changes in accounting policy about specific provisions of non performing
loans that are transferred to Fourth Group as of 30 September 2015 accounting period. In this scope, the specific provision of TL 17,864 that was
reserved within the previous periods is transferred to “Other Operating Income” account and the specific provision of TL 303,807 that was reserved in
current period is transferred to “Provision for Losses on Loans and Other Receivables” account as of 30 September 2015.
IX. INFORMATION ON OFFSETTING OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if and only if, there is a currently enforceable
legal right of the Group to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability
simultaneously.
