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VAKIFBANK
2014 ANNUAL REPORT
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE NOTE I. OF SECTION THREE
TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI
UNCONSOLIDATED FINANCIAL REPORT FOR THE
YEAR ENDED AT 31 DECEMBER 2014
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
Operational leases
Transactions regarding operational lease agreements are accounted on an accrual basis in accordance with the terms of the related contracts.
XIV. INFORMATION ON PROVISIONS AND CONTINGENT LIABILITIES
Provisions other than the specific and general provisions set for loans and other receivables and provisory liabilities are accounted in accordance with TAS 37
“Turkish Accounting Standard on Provisions, Contingent Liabilities and Contingent Assets Corresponding”.
In the financial statements, a provision is made 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 Bank to settle the liability, the related liability is considered as “contingent” and disclosed in the notes to the 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 financial statements since this may result in
the recognition of income that may never be realized. Contingent assets are assessed continually to ensure that developments are appropriately reflected in
the 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
financial statements of the period in which the change occurs. If an inflow of economic benefits has become probable, the Bank discloses the contingent asset.
XV. INFORMATION ON OBLIGATIONS OF THE BANK 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 2014 is TL 3,438 (full TL)
(31 December 2013: TL 3,254 (full TL)).
The Bank reserved for employee severance indemnities in the accompanying unconsolidated financial statements using actuarial method in compliance with
the TAS 19 – Employee Benefits.
As at 31 December 2014 and 31 December 2013, the major actuarial assumptions used in the calculation of the total liability are as follows:
Current Period
Prior Period
Discount Rate
8.60%
9.70%
Estimated Inflation Rate
6.50%
6.40%
Other benefits to employees
The Bank has provided provision for undiscounted short-term employee benefits earned during the financial period as per services rendered in compliance with
TAS 19 in the accompanying unconsolidated financial statements.
The accounting of actuarial gains and losses due to the changes in actuarial assumptions or the differences between assumption and realized has been
changed to be applied after the account periods starting from 1 January 2013 by “The communique (No: 9) about Employee Benefits (“TAS 19”)” published
by the Official Gazette No. 28585 dated 12 March 2013 issued by Public Oversight Accounting and Auditing Standards Authority. “Transition and Validity Date”
in the standard permits retrospective application. Thus, actuarial gains and losses have been accounted in “Other Profit Reserves” shown under “Equity”
associated with “The Statement of Gains and Losses Recognized in Equity” for the respective reporting periods.
Pension fund
The employees of the Bank are the members of “Türkiye Vakıflar Bankası Türk Anonim Ortaklığı Memur ve Hizmetlileri Emekli ve Sağlık Yardım Sandığı Vakfı”
(“the Fund”) established on 15 May 1957 as per the temporary article no. 20 of the Social Security Law no. 506.