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 342 VakıfBank Annual Report 2017 b) Main sources of differences between regulatory exposure amounts and carrying values in financial statements Current Period Total Items subject to credit risk Items subject to securitization Items subject to counterparty credit risk Items subject to market risk 1 Asset carrying value amount under scope of regulatoryconsolidation 280,415,328 273,416,470 - 11,863,186 475,761 2 Liabilities carrying value amount under regulatory scope of consolidation 29,028,884 - - 10,338,230 (49,131) 3 Total net amount under regulatory scope of consolidation 251,386,444 273,416,470 - 1,524,956 426,630 4 Off-balance sheet amounts 133,361,088 31,380,550 - 2,750,005 - 5 Differences in valuations - - - - - 6 Differences due to different netting rules, other than those already included in row 2 - - - - - 7 Differences due to consideration of provisions - - - - - 8 Differences due to prudential filters - (4,242,235) - - - 9 Differences due to risk reduction - - - 569,987 - 10 Exposure amounts considered for regulatory 384,747,532 300,554,785 - 3,319,992 426,630 Prior Period Total Items subject to credit risk Items subject to securitization Items subject to counterparty credit risk Items subject to market risk 1 Asset carrying value amount under scope of regulatory consolidation 220,165,306 214,548,939 - 13,073,137 593,440 2 Liabilities carrying value amount under regulatory scope of consolidation 14,682,905 - - 14,398,695 (45,403) 3 Total net amount under regulatory scope of consolidation 205,482,401 214,548,939 - (1,325,558) 638,843 4 Off-balance sheet amounts 114,819,263 22,688,894 - 2,225,820 548,037 5 Differences in valuations - - - - - 6 Differences due to different netting rules, other than those already included in row 2 - - - - - 7 Differences due to consideration of provisions - - - - - 8 Differences due to prudential filters - (3,898,133) - - - 9 Differences due to risk reduction - - - 769,791 - 10 Exposure amounts considered for regulatory 334,984,569 233,339,701 - 2,995,611 548,037 c) Explanations of differences bet ween accounting and regulatory exposure amounts There is no significant difference between the amounts assessed pursuant to TAS and the risk amounts used within the scope of capital adequacy reported on the financial statements. 3. Credit Risk Explanations a) General Information on Credit Risk If the counterparty does not partially or completely fulfil its obligations in accordance with contract, the credit risk is exposed. The Group’s definition of credit risk contains the credit risk in all products and activities based on the credit definition of law of banking. The Parent Bank’s branches, regional directorates, general directorate crediting units, deputy general manager responsible for credits, general manager, credit committee and board of directors determine the credit limits for counterparties within the framework of lending authority limits and provide credits within these limits in accordance with the articles 51 and 54 of banking law and in compliance with legal legislation in order to restrict the credit risk in the crediting operations.