VKF_FRAE_2018_uyg11

VakıfBank Annual Report 2018 167 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.) Effects on equity with TFRS 9 transition Deferred tax rate calculation has started to be measerued over temporary expected provision losses differences according to TFRS 9 articles and BRSA regulations, beginning from January 1, 2018. In this framework, TL 479,084 valued deferred tax asset has been reflected to January 1, 2018 opening financials, and this amount are classified as prior period profit/loss under equity. TL 250,367 revenue, consisisted from bank’s prior period’s provisions and new loss provisions that measured in accordance with TFRS 9’s expented loss model beginning from January 1, 2018, classified as prior period profit/loss under equity. For the specific provisions (TFRS 9 expected loss provisions for third stage loans), which have been cancelled due to TFRS 9 transition, corporate tax loss amounting to TL 170,480 is classified under “Prior year profit/loss” in equity as of January 1, 2018. Equity securities followed under available-for-sale financial assets before January 1, 2018, along with its following under financial assets at fair value through profit or loss beginning from TFRS 9’s first implementation date, the amount of TL 11,151 impairment provision are classified as prior period’s profit/loss under equity. Remeasurement difference regarding the after tax effect amounting net TL 161,636 has been classified under “Accumulated Other Comprehensive Income or Expense Reclassified through Other Profit or Loss”, for the securities amounting TL 7,454,527 classified before January 1, 2018 as available-for-sale financial assets and after fair value through other comprehensive income, has been classified with the TFRS 9 transition as measured at amortized cost. XXV. EXPLANATIONS ON PRIOR PERIOD ACCOUNTING POLICIES NOT VALID FOR THE CURRENT PERIOD TFRS 9 Financial Instruments” standard came into effect instead of “TAS 39 Financial Instruments: Recognition and Measurement” as of January 1, 2018. Accounting policies lost their validity with the transition of TFRS 9 are given below: According to TAS 39 - Financial Instruments: Recognition and Measurement, financial assets are classified in four categories; as financial assets at fair value through profit or loss, available-for-sale financial assets, held-to-maturity investments, and loans and receivables. Financial assets at fair value through profit or loss The financial assets included in this group are, “Financial assets held for trading” and “Financial assets at fair value through profit or loss classified as financial assets” as it is divided into two separate titles. Financial assets held for trading are trading financial assets and are either acquired for generating profit from short-term fluctuations in the price or dealer’s margin, or are the financial assets included in a portfolio in which a pattern of short-term profit making exists independent from the acquisition purpose. Financial assets at fair value through profit or loss classified as financial assets are financial assets which are not acquired for trading, however during initial recognition with transaction costs and classified as fair value through profit or loss. Such an asset is not present in our Bank’s portfolio. Both assets are measured at their fair values and gain/loss arising is recorded in the statement of income. Interest income earned on financial assets and the difference between their acquisition costs and fair values are recorded as interest income in the statement of income. The gains/losses in case of disposal of such securities before their maturities are recorded under trading income/losses in the statement of income.