VKF_FRAE_2018_uyg11

194 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.) III. FOREIGN CURRENCY EXCHANCE RISK Foreign exchange risk that the Bank exposed to, estimation of effects of exposures, and the limits set by the Board of Directors of the Bank for the positions being monitored on a daily basis The Standard Method which is also used in the legal reporting is used in measuring the currency risk of the Bank. All of the foreign currency assets and liabilities and the forward foreign-currency transactions are taken into consideration in calculating the capital obligation for the currency risk. The net long and short positions are calculated in Turkish Lira equivalent of the each currency. The position with the biggest absolute value is determined as the base amount for the capital obligation and the capital obligation is calculated at that amount. The magnitude of hedging foreign currency debt instruments and net investment in foreign operations by using derivatives As at December 31, 2018 and December 31, 2017 the Bank does not have derivative financial instruments held for risk management. Foreign exchange risk management policy Risk policy of the Bank is based on the transactions within the limits and keeping the currency position well-balanced. In the light of the national legislations and international applications, the Bank has established a foreign currency risk management policy that enables the Bank to take position between lower and upper limits determined in respect of the current equity profile. Speculative position is not held by the Bank. The Bank’s effective exchange rates at the date of balance sheet and for the last five working days of the period announced by the Bank in TL are as follows: US Dollar Euro The Bank’s foreign currency purchase rate at the balance sheet date 5.2800 6.0387 Foreign currency purchase rates for the days before balance sheet date; Day 1 5.2729 6.0467 Day 2 5.2868 6.0272 Day 3 5.2798 6.0140 Day 4 5.3022 6.0258 Day 5 5.2966 6.0518 US Dollar Euro Last 30-days arithmetical average rate 5.3048 6.0348