VKF_FRAE_2017

CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUEDIN TURKISH, SEE NOTE I. OF SECTION THREE TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI EXPLANATIONS AND NOTES RELATED TO THE UNCONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) PART III: FINANCIAL HIGHLIGHTS AND RISK MANAGEMENT 206 VakıfBank Annual Report 2017 Credit quality of assets Current Period Gross carrying values of (according to TAS) Defaulted exposures Non-defaulted exposures Allowances/ impairments Net values 1 Loans 7,638,206 182,942,481 6,609,072 183,971,615 2 Debt Securities - 30,127,332 123,452 30,003,880 3 Off-balance sheet exposures 169,355 79,708,432 75,942 79,801,845 4 Total 7,807,561 292,778,245 6,808,466 293,777,340 Prior Period Gross carrying values of (according to TAS) Defaulted exposures Non-defaulted exposures Allowances/ impairments Net values 1 Loans 6,413,503 146,619,289 5,320,417 147,712,375 2 Debt Securities - 26,219,504 247,522 25,971,982 3 Off-balance sheet exposures 165,159 65,401,526 59,816 65,506,869 4 Total 6,578,662 238,240,319 5,627,755 239,191,226 Changes in stock of defaulted loans and debt securities (*) Current Period Prior Period 1 Defaulted loans and debt securities at end of the previous reporting period 6,413,503 4,850,213 2 Loans and debt securities that have defaulted since the last reporting period 3,189,506 2,919,386 3 Returned to non-defaulted status 106,595 31,895 4 Amounts written off - - 5 Other changes (1,858,208) (1,324,201) 6 Defaulted loans and debt securities at end of the reporting period (1+2-3-4±5) Definitions 7,638,206 6,413,503 (*) Provisions for non-cash loans that are not indemnified and not converted into cash are not included. Additional disclosure related to the credit quality of assets The Bank classifies loans and other receivables in accordance with the “Regulation on Identification of and Provision against Non-Performing Loans and Other Receivables” and other regulations. When loans that are followed under the groups except Group I mentioned in this regulation are classified as past due items, general provision is calculated for Group II, and special provision is calculated for loans followed under Group III, IV and Group V. According to the above mentioned “Regulation on Identification of and Provision against Non-Performing Loans and Other Receivables” Minimum provision rates to Loans classified is 20% to loans on Group III, 50% to loans on Group IV and 100% to loans on Group V. Restructuring that can be applied for performing or non-performing receivables is done by changing the terms of the loan contract or by partially or completely refinancing the loan due to the financial difficulties that the borrower is facing or is likely to encounter in the payments.