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 326 VakıfBank Annual Report 2017 Portfolio-Prior Period Revaluation Surplus Unrealized Gain and Loss Realized Gain/Loss in Current Period Total (*) Included in Core Capital Total (*) Included in Core Capital Included in Supplementary Capital 1. Private Capital Investments - - - - - - 2. Publicly Traded Stocks - - - - - - 3. Other Stocks - 64,288 64,288 - - - 4. Total - 64,288 64,288 - - - (*) Amounts are presented including the effect of deferred tax. Explanations on Equity Shares Risk Arising from Banking Book Portfolio-Current Period Carrying Value Total RWA Minimum Capital Requirement 1.Private Equity Investments - - - 2.Quoted 310,918 310,918 24,873 3.Other Stocks 396,553 396,553 31,724 4. Total 707,471 707,471 56,597 Portfolio-Prior Period Carrying Value Total RWA Minimum Capital Requirement 1.Private Equity Investments - - - 2.Quoted 263,309 263,309 21,065 3.Other Stocks 387,231 387,231 30,978 4. Total 650,540 650,540 52,043 VI. CONSOLIDATED LIQUIDITY RISK AND LIQUIDITY COVERAGE RATIO Liquidity risk is defined as the risk of not fulfilling payment liabilities on time as a result of not having adequate cash or cash inflow to meet the cash outflow properly due to imbalance in cash flows of the Group. The framework of liquidity risk of the Parent Bank is specified with Liquidity Risk Management Document. In the framework of liquidity risk management, policies regarding liquidity risk management are written down by Risk Management Department and fundamental principles, analyses regarding measurement and monitoring risk, basic rudiments on early warning indicators, liquidity buffer and limits are included. The Group is managing liquidity risk according to risk capacity and the Group’s risk appetite in the range envisioned by the regulations. Liquidity risk management approach is in general based on the principle of monitoring in-day liquidity risk. The Group monitors the net liquidity position and liquidity requirements continuously and facing the future. The Group takes precautions to increase diversity in fund sources to increase effectiveness and durability in liquidity risk management. On market basis and specific to the Group (in consideration of market and funding liquidity) scenario and susceptibility analyses are performed and assumptions based on these analyses are reviewed regularly. It is aimed to protect the optimum liquidity level that can meet short – term liquidity needs not to remain inactive and maintain profitability – risk balance.