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 366 VakıfBank Annual Report 2017 Information on non-performing loans and other receivables in foreign currencies Group III Group IV Group V Loans and receivables with limited collectability Loans and receivables with doubtful collectability Uncollectible loans and receivables Current Period Balance at the end of the period 43,425 12,519 581,510 Specific provision (-) 9,094 7,242 540,597 Net balance on balance sheet 34,331 5,277 40,913 Prior Period Balance at the end of the period 64,048 17,087 423,134 Specific provision (-) 52,069 8,807 382,751 Net balance on balance sheet 11,979 8,280 40,383 Non-performing loans due to foreign currency denominated loans provided by the Parent Bank or domestic financial subsidiaries are followed in TL accounts, while non-performing loans provided by subsidiaries in abroad are followed in foreign currency accounts. Explanation on Write-off Policy The Group writes off a loan balance (and any related allowances for impairment losses) when it is concluded that those loans are uncollectible. This conclusion is given after considering information such as the occurrence of significant changes in the borrower / issuer’s financial position such that the borrower / issuer can no longer pay the obligation, or that proceeds from collateral will not be sufficient to pay back the entire exposure. For smaller balance standardized loans, charge off decisions generally are based on a product specific past due status. The gross and net amounts of non-performing loans according to user groups Group III Group IV Group V Loans and receivables with limited collectability Loans and receivables with doubtful collectability Uncollectible loans and receivables Current Period (Net) 610,611 443,935 51,708 Consumer and Commercial Loans (Gross) 763,928 872,720 6,206,914 Specific Provision (-) 153,416 429,559 6,155,206 Consumer and Commercial Loans (Net) 610,512 443,161 51,708 Banks (Gross) - - 1,551 Specific Provision (-) - - 1,551 Banks (Net) - - - Other Loans and Receivables (Gross) 124 1,548 96,401 Specific Provision (-) 25 774 96,401 Other Loans and Receivables (Net) 99 774 - Prior Period (Net) 557,437 552,560 60,778 Consumer and Commercial Loans (Gross) 946,563 1,097,026 4,551,110 Specific Provision (-) 389,232 549,216 4,490,332 Consumer and Commercial Loans (Net) 557,331 547,810 60,778 Banks (Gross) - - 8,761 Specific Provision (-) - - 8,761 Banks (Net) - - - Other Loans and Receivables (Gross) 133 9,500 90,290 Specific Provision (-) 27 4,750 90,290 Other Loans and Receivables (Net) 106 4,750 -