VKF_FRAE_2018_uyg11

180 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.) Collaterals for the credit limits are determined on a customer basis in order to ensure bank placements and their liquidity. The amount and type of the collateral are determined regarding the creditworthiness of the credit users. The Bank holds collateral against loans and advances to customers in the form of mortgage interests over property, other registered securities over assets, and guarantees. The Bank has risk control limits for derivative transaction (futures, options, etc.) positions, which effects credit risk and market risk. For credit risk management purposes, Risk Management Department operates in • the determination of credit risk policies in coordination with the Bank’s other units, • the determination and monitoring of the distribution of concentration limits with respect to sector, geography and credit type, • the contribution to the formation of rating and scoring systems, • the submit to the Board of Directors and the senior management of not only credit risk management reports about credit portfolio’s distribution (borrower, sector, geographical region), credit quality (impaired loans, credit risk ratings) and credit concentration but also scenario analysis reports, stress tests and other analyses, • the studies regarding the formation of advanced credit risk measurement approaches. Credit risk is defined and managed for all cash and non-cash agreements and transactions, which carry counterparty risk. Loans with renegotiated terms are followed in accordance with Bank’s credit risk management and follow-up principles. The financial position and trading operations of related customers are continuously analyzed and principal and interest payments, scheduled in renegotiation agreement, are strictly controlled by related departments. In the framework of Bank’s risk management concept, long term commitments are accepted more risky than short term commitments. Besides, risk limits defined for long term commitments and collaterals that should be taken against long term commitments are handled in a wider range compared to short term commitments. Indemnified non-cash loans are regarded as the same risk weight with the loans that are pastdue and unpaid. Banking operations and lending activities carried in foreign countries are not exposed to material credit risks, due to related countries’ financial conditions, customers and their operations. The Bank’s largest 100 cash loan customers compose 32.18% of the total cash loan portfolio (December 31, 2017: 26.52%). The Bank’s largest 100 non-cash loan customers compose 50.47% of the total non-cash loan portfolio (December 31, 2017: 53.48%). The Bank’s largest 100 cash loan customers compose 21.52% of total assets of the Bank and the Bank’s largest 100 non-cash loan customers compose 13.78% of total off-balance sheet items (December 31, 2017: 17.93% and 16.99%). The Bank’s largest 200 cash loan customers compose 39.40% of the total cash loan portfolio (December 31, 2017: 32.81%). The Bank’s largest 200 non-cash loan customers compose 64.06% of the total non-cash loan portfolio (December 31, 2017: 65.73%). The Bank’s largest 200 cash loan customers compose 26.35% of total assets of the Bank and the Bank’s largest 200 non-cash loan customers compose 17.49% of total off-balance sheet items (December 31, 2017: 22.18% and 20.88%).