VKF_FRAE_2018_uyg11

166 Part III: Financial Highlights and Assessment of Risk Management CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE NOTE I. OF SECTION THREE TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI AND ITS FINANCIAL SUBSIDIARIES NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED DECEMBER 31, 2018 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) 1) Financial assets measured as amortized cost in accordance with TFRS 9 standard: The Bank has reassessed the management model for the collection of contractual cash flows in the security portfolio or for the sale of the financial assets and cash flows depending on the contract. The Bank has classified fair value through other comprehensive income amounting TL 7,454,527 , which were classified before as available-for-sale financial assets, as measured at amortized cost due to the reason that appropriate management model of those marketable securities have the purpose of collecting cash flows or selling financial assets. 2) Equity securities designated at fair value through profit or loss in accordance with TFRS 9 standard: The Bank has classified equity securities amounting to TL 43,370, which were classified as available-for-sale financial assets to designated at Fair Value through Profit or Loss as of the first application date of TFRS 9. 3) Reclassification of categorized items without a change in measurement: In addition to the statements above, since the previous categories under TAS 39 of the debt instruments below were “out of action” under TAS 39 , the following borrowing instruments are reclassified in new categories under TFRS 9 without changing any measurement principles. (i) Previously classified as “available-for-sale” and as of January 1, 2018 classified as “Fair Value Through Other Comprehensive Income” and (ii) Previously classified as held-to-maturity and as of January 1, 2018 classified as “measured at amortized cost”. Reconciliation of the opening balances of the provision for expected credit losses to TFRS 9 The table below shows the reconciliation of the provision for impairment of the Bank as of December 31, 2017 and the provision for the expected loss model as measured in accordance with TFRS 9 as of January 1, 2018. Book Value before TFRS 9 Remeasurements Book Value after TFRS 9 December 31, 2017 January 1, 2018 Loans 8,307,489 (508,313) 7,799,176 Stage 1 1,527,551 (90,072) 1,437,479 Stage 2 181,119 218,054 399,173 Stage 3 6,598,819 (636,295) 5,962,524 Financial Assets (*) 39,402 41,876 81,278 Non-Cash Loans 292,475 216,070 508,545 Stage 1 and 2 (**) 137,421 340,068 477,489 Stage 3 (***) 155,054 (123,998) 31,056 Total 8,639,366 (250,367) 8,388,999 (*) Within the scope of TFRS 9 Financial Assets Measured at Amortized Cost include provisions for Financial Assets at Fair Value through Other Comprehensive Income, Banks and Receivables from Money Market (**) Before TFRS 9, the expected credit loss for stage 1 and 2 non-cash loans is classified “General Provision” and expected credit loss for stage 3 non-cash loans is classified “Other Provisions” under liabilities. (***) In accordance with TFRS 9, the expected loss provisions for the 3rd stage non-cash loans are in the “Other Provisions” column in the liabilities.