Basic HTML Version
Türkiye Vakıflar Bankası Türk Anonim Ortaklığı
Unconsolidated Financial Report as at and
For the Year Ended 31 December 2013
(Currency: Thousands of Turkısh Lıra (“TL”))
(Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Section 3 Note I)
If the net investments in associates and subsidiaries operating in foreign countries are measured at cost, they are reported as translated into TL by
using the foreign exchange rate at the date of transaction. If related associates and subsidiaries are measured at fair value, net foreign operations are
reported as translated into TL by the rates prevailing at the date of the determination of the fair value.
III. Information on forwards, options and other derivative transactions
The derivative transactions mainly consist of currency and interest rate swaps, foreign currency forward contracts and currency options. The Bank has
classified its derivative transactions, mentioned above, as “trading purpose” in accordance with the TAS 39 –
Financial Instruments: Recognition and
Measurement.
Derivatives are initially recorded at their purchase costs including the transaction costs.
The notional amounts of derivative transactions are recorded in off-balance sheet accounts based on their contractual amounts.
Subsequently, the derivative transactions are measured at their fair values and the changes in fair values are recorded in the balance sheet under
“derivative financial assets held for trading purpose” or “derivative financial liabilities held for trading purpose”. The subsequent fair value changes of
derivative transactions are recognized in the statement of income.
IV. Information on interest income and expenses
Interest income and expense are recognized according to the effective interest method based on accrual basis. Effective interest rate is the rate that
discounts the expected cash flows of financial assets or liabilities during their lifetimes to their carrying values. Effective interest rate is calculated when
a financial asset or a liability is initially recorded and is not modified thereafter.
The computation of effective interest rate comprises discounts and premiums, fees and commissions paid or received and transaction costs. Transaction
costs are additional costs that are directly related to the acquisition, issuance or disposal of financial assets or liabilities.
In accordance with the related regulation, the accrued interest income on non-performing loans are reversed and subsequently recognized as interest
income only when collected.
V. Information on fees and commissions
Fees and commission received and paid are recognized according to either accrual basis of accounting or effective interest method depending on nature
of fees and commission; incomes derived from agreements and asset purchases for third parties are recognized as income when realized.
VI. Information on financial assets
A financial asset is any asset that is cash, an equity instrument of another entity, a contractual right to receive cash or another financial asset from
another entity; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favorable to the entity.
Financial assets except for measured at fair value through profit or loss are recognized initially with their transaction costs that are directly attributable
to the acquisition or issue of the financial asset. Purchase and sale transactions of securities are accounted at settlement dates.
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
Such 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.
Held to maturity investments, available-for-sale financial assets and loans and receivables
Held to maturity investments
are the financial assets with fixed maturities and pre-determined payment schedules that the Bank has the intent and
ability to hold until maturity, excluding loans and receivables. Held-to-maturity investments are measured at amortized cost using effective interest
method after deducting impairments, if any.
VAKIFBANK ANNUAL REPORT 2013
119