VKF_FRAE_2017

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 EXPLANATIONS AND NOTES RELATED TO THE CONSOLIDATED 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 302 VakıfBank Annual Report 2017 Current Period December 31, 2017 Amount as per the regulation before 1/1/2014 (*) Transition from the Core Capital to Continue to deduce Components 92,106 - Goodwill and other intangible assets and related deferred tax liabilities which will not deducted from Common Equity Tier 1 capital for the purposes of the first sub- paragraph of the Provisional Article 2 of the Regulation on Banks’ Own Funds (-) - - Net deferred tax asset/liability which is not deducted from Common Equity Tier 1 capital for the purposes of the sub-paragraph of the Provisional Article 2 of the Regulation on Banks’ Own Funds (-) - - The amount to be deducted from Additional Tier 1 Capital (-) - - Total Deductions from Additional Tier 1 capital Total Additional Tier 1capital (AT1) - - Total Tier 1 Capital (Tier 1 Capital=Common Equity+Additional Tier 1 Capital) 19,209,033 - TIER 2 CAPITAL - Bank's borrowing instruments and related issuance premium 2,723,659 - Bank's borrowing instruments and related issuance premium (Temporary Article 4) 977,288 - Third parties’ share in the Tier II Capital - - - Third parties’ share in the Tier II Capital (Temporary Article 3) 6,053 - Provisions (Article 8 of the Regulation on the Equity of Banks) 1,983,272 - Tier 2 Capital Before Deductions 5,971,026 - Deductions From Tier 2 Capital - - Bank’s direct or indirect investment in Tier 2 Capital (-) - - Investments of Bank to Banks that invest on Bank’s Tier 2 and components of equity issued by Financial Institutions with the conditions declared in Article 8 - - Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions where the Bank Owns 10% or less of the Issued Share Capital Exceeding the 10% threshold of Common Equity Tier 1 Capital (-) - - The Total of Net Long Position of the Direct or Indirect Investments in Additional Core Capital and Tier 2 Capital of Unconsolidated Banks and Financial Institutions where the Bank Owns 10% or more of the Issued Share Capital Exceeding the 10% Threshold of Tier 1 Capital - - Other Items Determined by BRSA (-) - - Total Deductions From Tier 2 Capital - - Tier 2 Capital 5,971,026 - Total Capital (The sum of Tier 1 Capital and Tier 2 Capital) 29,145,283 - The sum of Tier 1 Capital and Tier 2 Capital (Total Capital) - - Loan granted to Customer against the Articles 50 and 51 of the Banking Law - - Net Book Values of Immovables Exceeding 50% of the Equity and of Assets Acquired against Overdue Receivables and Held for Sale as per the Article 57 of the Banking Law but Retained More Than Five Years (-) - - Other items to be defined by the BRSA (-) 1,355 - In transition from Total Core Capital and Supplementary Capital (the capital) to Continue to Download Components - - Portion of the total of net long positions of investments made in Common Equity items of banks and financial institutions outside the scope of consolidation where the Bank owns 10% or less of the issued common share capital exceeding 10% of Common Equity of the Bank not to be deducted from the Common Equity, Additional Tier 1 Capital, Tier 2 Capital as per the 1st clause of the Provisional Article 2 of the Regulation on the Equity of Banks - - Portion of the total of net long positions of direct or indirect investments made in Additional Tier 1 and Tier 2 Capital items of banks and financial institutions outside the scope of consolidation where the Bank owns 10% or more of the issued common share capital exceeding 10% of Common Equity of the Bank not to be deducted from the Additional Tier 1 Capital and Tier 2 Capital as per the 1st clause of the Provisional Article 2 of the Regulation on the Equity of Banks - - Portion of the total of net long positions of investments made in Common Equity items of banks and financial institutions outside the scope of consolidation where the Bank owns 10% or more of the issued common share capital, deferred tax assets based on temporary differences and mortgage servicing rights not deducted from Common Equity as per the 1st and 2nd Paragraph of the 2nd clause of the Provisional Article 2 of the Regulation on the Equity of Banks - - TOTAL CAPITAL - - Total Capital 29,143,928 - Total Risk Weighted Amounts 194,903,773 - CAPITAL ADEQUACY RATIOS - - Consolidated Core Capital Adequacy Ratio (%) 11.92 - Consolidated Tier 1 Capital Adequacy Ratio (%) 11.89 - Consolidated Capital Adequacy Ratio (%) 14.95 - BUFFERS - - Total buffer requirement 1.753 - Capital conservation buffer requirement (%) 1.250 - Bank specific counter-cyclical buffer requirement (%) 0.003 - Systemically important banks buffer requirement (%) 0.500 - The ratio of Additional Common Equity Tier 1 capital which will be calculated by the first paragraph of the Article 4 of Regulation on Capital Conservation and Countercyclical Capital buffers to Risk Weighted Assets (%) 7.42 - Amounts below deduction thresholds - - Amounts arising from the net long positions of investments made in Total Capital items of banks and financial institutions where the Bank owns 10% or less of the issued common share capital - - Amounts arising from the net long positions of investments made in Tier 1 Capital items of banks and financial institutions where the Bank owns 10% or more of the issued common share capital - - Mortgage servicing rights - - Deferred tax assets arising from temporary differences (net of related tax liability) - - Limits related to provisions considered in Tier 2 calculation - - General provisions for standard based receivables (before tenthousandtwentyfive limitation) 1,885,493 - Up to 1.25% of total risk-weighted amount of general reserves for receivables where the standard approach used 2,244,752 - Excess amount of total provision amount to credit risk Amount of the Internal Ratings Based Approach in accordance with the Communiqué on the Calculation - - Excess amount of total provision amount to 0.6% of risk weighted receivables of credit risk Amount of the Internal Ratings Based Approach in accordance with the Communiqué on the Calculation - - Debt instruments subjected to Article 4 (to be implemented between 1 January 2018 and 1 January 2022) - - Upper limit for Additional Tier 1 Capital subjected to temporary Article 4 - - Amounts Excess the Limits of Additional Tier 1 Capital subjected to temporary Article 4 - - Upper limit for Additional Tier 2 Capital subjected to temporary Article 4 - - Amounts Excess the Limits of Additional Tier 2 Capital subjected to temporary Article 4 - - (*) Represents the amounts taken into consideration according to transition clauses.