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 344 VakıfBank Annual Report 2017 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 6,703,383 5,138,113 2 Loans and debt securities that have defaulted since the last reporting period 3,216,747 2,957,373 3 Returned to non-defaulted status 106,595 31,895 4 Amounts written-off 4,054 1,341 5 Other Changes (1,866,295) 1,358,867 6 Defaulted Loans and debt securities at end of the reporting period (1+2-3-4±5) 7,943,186 6,703,383 (*) Indemnified non-cash loans of the firms which are followed under “Non-performing Loans” accounts are not included in the table. Additional disclosure related to the credit quality of assets The Parent 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. Breakdown of receivables in terms of geographic regions, sectors and remaining maturities Breakdown of receivables in terms of geographic regions Current Period Prior Period Geographical area Credit receivables/risks Credit receivables/risks Domestic 179,159,737 143,862,151 European Union Countries 538,912 210,585 OECD Countries (*) - - Off-Shore Banking Regions - - USA, Canada 1,801,673 1,756,636 Other 8,014,710 5,512,245 Total 189,515,032 151,341,617 * OECD Countries other than EU countries, USA and Canada.