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Türkiye Vakıflar Bankası Türk Anonim Ortaklığı
and Its Financial Subsidiaries Consolidated Financial Report as at and
For the Year Ended 31 December 2013
(Currency: Thousands of Turkish Lira (“TL”))
Convenience Translation of the Consolidated Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Section 3 Note I
As per the resolution of the Board of Directors of the Bank held on 8 September 2011, it has been decided to merge Vakıf Sistem Pazarlama Yazılım
Servis Güvenlik Temizlik Ticaret ve Sanayi AŞ with Vakıf Pazarlama Ticaret AŞ with disolution of Vakıf Sistem Pazarlama Yazılım Servis Güvenlik Temizlik
Ticaret ve Sanayi AŞ without liquidation, in accordance with article 451 of Turkish Commercial Code. Since Vakıf Pazarlama ve Ticaret AŞ is not a financial
subsidiary anymore, its financial statements have not been consolidated as at 31 December 2013 and 31 December 2012, but its equity until the
merger date has been included in the accompanying consolidated financial statements.
Investments in associates accounted with equity method
As at and for the year ended 31 December 2013, the financial statements of Kıbrıs Vakıflar Bankası Ltd and Türkiye Sınai Kalkınma Bankası AŞ have been
accounted with equity method in the consolidated financial statements of the Group.
Kıbrıs Vakıflar Bankası Ltd
. was established in 1982 in Turkish Republic of Northern Cyprus, mainly to encourage the credit cards issued by the Bank, and
increase foreign exchange inflow, and carry on retail and commercial banking operations. Its head office is in Lefkosa.
Türkiye Sınai Kalkınma Bankası AŞ
was established in 1950 to support investments in all economical sectors. Its head office is in Istanbul.
In cases where the accounting policies for the preparation of the financial statements of Financial Subsidiaries are different than those of the Parent
Bank, the differences have been adjusted to the accounting policies of the Parent Bank, taking the materiality principle into account. The financial
statements of local Financial Subsidiaries, and foreign Financial Subsidiaries preparing their financial statements according to the principles of the
countries which they are located in, have been adjusted in accordance with Reporting Standards as at the related reporting dates. Inter-company
balances and transactions, and any unrealized gains and losses arising from inter-company transactions, are eliminated in preparing these consolidated
financial statements.
IV. Information on forwards, options and other derivative transactions
The derivative transactions mainly consist of foreign currency and interest rate swaps, foreign currency forward contracts and foreign currency options.
The Group has classified its derivative transactions as “trading derivatives” in accordance with the TAS 39 –
Financial Instruments: Recognition and
Measurement.
Derivatives are initially recorded at their acquisition costs including the transaction costs.
The notional amounts of derivative transactions are recorded in off-balance sheet accounts based on their contractual amounts stated on the related
derivative contracts.
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 are
recorded in the consolidated statement of income.
V. Information on interest income and expenses
Banking activities
Interest income and expense are recognized according to the effective interest method based on accrual basis. The effective interest rate is the rate
that discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability (or, where appropriate, a
shorter period) to the carrying amount of the financial asset or liability. 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 all fees and points paid or received transaction costs, and discounts or premiums that are an
integral part of the effective interest rate. Transaction costs are additional costs that are directly related to the acquisition, emition or disposal of
financial assets or liabilities.
As per relevant legislation, the accrued interest income on non-performing loans are reversed and subsequently recognized as interest income only
when collected.
Finance leasing activities
The total of minimum rent amounts are recorded at “finance lease receivables” account in gross amounts comprising the principal amounts and
interests. The interest, the difference between the total of rent amounts and the cost of the fixed assets, is recorded at “unearned income” account. As
the rents are collected, “finance lease receivables” account is decreased by the rent amount; and the interest component is recorded in the consolidated
statement of income as interest income.
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