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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
XV. Information on leasing activities
Finance leasing activities as the lessee
Tangible assets acquired through finance leasing are recognized in tangible assets and the obligations under finance leases arising from the lease
contracts are presented under “Finance Lease Payables” account in the consolidated balance sheet of the Group. In the determination of the related
asset and liability amounts, the lower of the fair value of the leased asset and the present value of leasing payments is considered. Financial costs on
leasing agreements are expanded in lease periods at a fixed interest rate.
If there is impairment in the value of the assets obtained through finance lease and in the expected future benefits, the leased assets are valued with
net realizable value. Depreciation for assets obtained through finance lease is calculated in the same manner as tangible assets.
Finance leasing activities as the lessor
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 at consolidated
income statement as interest income.
Operational lease activities
Transactions regarding operational lease agreements are accounted on an accrual basis in accordance with the terms of the related contracts.
XVI. Information on provisions and contingent liabilities
In the consolidated financial statements, a provision is booked for an existing commitment resulted from past events if it is probable that the
commitment will be settled and a reliable estimate can be made of the amount of the obligation. Provisions are calculated based on the best estimates
of management on the expenses to incur as at the balance sheet date and, if material, such expenses are discounted for their present values. If the
amount is not reliably estimated and there is no probability of cash outflow from the Group to settle the liability, the related liability is considered as
“contingent” and disclosed in the notes to the consolidated financial statements.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence
of one or more uncertain future events not wholly within the control of the entity. Contingent assets are not recognized in consolidated financial
statements but are assessed continuously to ensure that related updates are appropriately reflected in the consolidated financial statements. If it has
become virtually certain that an inflow of economic benefits will arise, the asset and the related income are recognized in the consolidated financial
statements of the period in which the change occurs. If an inflow of economic benefits has become probable, the Group discloses the contingent asset.
XVII. Information on obligations of the Group concerning employee rights
Reserve for employee termination benefits
In accordance with existing Turkish Labour Law, the Bank is required to make lump-sum termination indemnities to each employee who has completed
one year of service with the Bank and whose employment is terminated due to retirement or for reasons other than resignation or misconduct. The
computation of the liability is based upon the retirement pay ceiling announced by the Government. The applicable ceiling amount as at 31 December
2013 is TL 3,254 (full TL) (31 December 2012: TL 3,034 (full TL)).
The Group reserved for employee severance indemnities in the accompanying consolidated financial statements using actuarial method in compliance
with the TAS 19 –
Employee Benefits
.
As at 31 December 2013 and 2012, the major actuarial assumptions used by the Parent Bank in the calculation of the total liability are as follows:
Current Year
Prior Year
Discount Rate
9.70%
7.01%
Inflation Rate
6.40%
5.00%
Increase in Real Wage Rate
7.40%
5.00%
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