VKF_FRAE_2018_uyg11

VakıfBank Annual Report 2018 407 CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE I. OF SECTION THREE TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI AND ITS FINANCIAL SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) 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 Company. 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. The classification of fair value measurements of financial assets and liabilities measured at fair value is as follows: Current Period - December 31, 2018 Level 1 Level 2 Level 3 Total Financial assets at fair value through profit/loss: 14,446 210,032 27 224,505 Debt securities 10,164 - - 10,164 Equity securities 2,887 69,766 27 72,680 Other financial assets 1,395 140,266 - 141,661 Financial assets at fair value through other comprehensive income 8,876,012 1,992,971 3,451 10,872,434 Government debt securities 7,895,462 1,927,912 - 9,823,374 Equity securities - - 3,451 3,451 Other financial assets 980,550 65,059 - 1,045,609 Investments in affiliates and subsidiaries 353,407 - 788,230 (*) 1,141,637 Total Financial Assets 9,243,865 2,203,003 791,708 12,238,576 Financial liabilities at fair value through profit/loss: Derivative financial liabilities held for trading purpose - (2,552,248) - (2,552,248) Total Financial Liabilities - (2,552,248) - (2,552,248) (*) This amount consist of fair value of the affiliates and subsidiaries determined by independent valuation companies.