VKF_FRAE_2018_uyg11

208 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.) Prior Period - December 31, 2017 Carrying Value Fair Value Financial Assets: Receivables from Interbank Money Markets 1,652,102 1,652,102 Banks 11,887,828 11,887,828 Financial Assets at Fair Value through Other Comprehensive Income 13,549,714 13,549,714 Assets Measured at Amortised Cost 16,766,071 16,466,094 Loans 183,971,615 185,012,645 Financial Liabilities: Bank Deposits 9,778,103 9,778,103 Other Deposits 145,499,019 145,316,551 Funds Borrowed 28,307,621 28,269,920 Marketable Securities 19,485,098 19,286,884 Subordinated Loans 5,935,969 5,856,356 Miscellaneous Payables 6,848,328 6,848,328 Fair values of available-for-sale financial assets and held-to-maturity investments are derived from market prices or in case of absence of such prices they are derived from prices of other marketable securities, whose interest rate, maturity date and other conditions are similar to securities held. Fair value of loans are calculated by discounting future cash flows with the use of current market interest rates. Fair value of funds borrowed with fixed interest rate are calculated by discounting cash flows with current market interest rates. Fair value of funds borrowed with floating interest rate is calculated according to repricing period by discounting cash flows with current market rates. Fair value of other assets and liabilities is calculated by adding accumulated acquisition costs and the sum of the interest accrual. Classification of Fair Value Measurement TFRS 7 - Financial Instruments requires the classification of fair value measurements into a fair value hierarchy by reference to the observability and significance of the inputs used in measuring fair value of financial instruments measured at fair value to be disclosed. This classification basicly relies on whether the relevant inputs are observable or not. Observable inputs refer to the use of market data obtained from independent sources, whereas unobservable inputs refer to the use of predictions and assumptions about the market made by the Bank. This distinction brings about a fair value measurement classification generally as follows: Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); Level 3: Fair value measurements using inpus for the assets or liabilitity that are not based on observable market data (unobservable inputs). Classification requires using observable market data if possible.