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FINANCIAL HIGHLIGHTS AND RISK MANAGEMENT
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.)
Related parties
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making
financial and operating decisions. Shareholders, top executives and board members are accepted as related party personally, with their families and companies
according to TAS 24 - Related Party Disclosures Standard. Transactions made with related parties are disclosed in Section 5 Note VII.
Cash and cash equivalents
Cash and cash equivalents which is a base for preparation of cash flow statement includes cash in TL, cash in FC, cheques, demand deposits for both Central
Bank of Turkey (“CBT”) and other banks, money market placements and time deposits at banks and marketable securities whose original maturity is less than
three months.
Classifications
There might be certain reclassifications in the financial statements as of 31 December 2013 in order to maintain consistency with the financial statement
presentation as of 31 December 2014 audit report. Accordingly the assets to be disposed classified under “Fixed Assets” which has an amount of TL 564,744
has been reclassified to “Assets Held for Sale and “Provision for Short-Term Employee Benefits” classified under the “Provision for Losses on Loans and Other
Receivables” in statement of Income which has an amount of TL 127,968 has been reclassified to “Other Operating Expense”.
SECTION FOUR
INFORMATION RELATED TO FINANCIAL POSITION OF THE BANK
I. CAPITAL ADEQUACY RATIO
The Bank’s unconsolidated capital adequacy ratio is 13.96% (31 December 2013: 13.70%).
Risk measurement methods in calculation of capital adequacy ratio
Capital adequacy ratio is calculated within the scope of the “Regulation on the Measurement and Assessment of Capital Adequacy Ratios of Banks
(Regulation)”, “Regulation on Credit Risk Mitigation Techniques” and “Communiqué on Risk Weighted Amounts for Securitization Exposures” published in Official
Gazette no. 28337 dated 28 June 2012 and “Regulation on the Equity of Banks” published in Official Gazette no. 26333 dated 1 November 2006.
The data used in calculation of capital adequacy ratio is organized in accordance with the accounting records prepared in compliance with the current
legislation. Besides, the Bank classifies these data as “Trading Book” and “Banking Book”; and takes into account in the calculation of market risk and credit risk
accordingly. Operational risks are also included in the calculation of capital adequacy ratio.
In the calculation of risk-based amounts, the Bank classifies its receivables into risk groups described in 6th article of the Regulation and considers the ratings
and risk mitigating elements. The amounts are evaluated in the related risk weight group, accordingly. The Bank applies “basic financial guarantee method” in
the consideration of risk mitigating elements for banking book accounts.
Trading book accounts and the items deducted from the capital base are not included in the calculation of credit risk. In calculation of risk weighted assets,
impairments, depreciation and amortization, and provisions are considered as deduction items.
In the calculation of their risk-based values, non-cash loans are weighted after netting with specific provisions that are classified under liabilities and calculated
based on the “Regulation on Identification of and Provision against Non-Performing Loans and Other Receivables”. The net amounts are multiplied by the rates
stated in the Article 5 of “Regulation regarding Measurement and Assessment of Capital Adequacy Ratios of Banks”, subjected to risk mitigation in accordance
with the “Communique on Credit Risk Mitigation Techniques”, classified into related risk-weighted group in accordance with Article 6 of the Regulation, then
multiplied with the risk weight of the group in accordance with the Appendix 1 of the Regulation.
In the calculation of their risk-based values, Derivative Financial Instruments and Credit Derivative Contracts which are accounted in banking book, the
receivable amounts due to counter parties are multiplied by the rates stated in the Appendix 2 of the Regulation, subjected to risk mitigation in accordance
with the “Communique on Credit Risk Mitigation Techniques”, classified into related risk-weighted group in accordance with Article 6 of the Regulation, then
multiplied with the risk weight of the group in accordance with the Appendix 1 of the same Regulation. In compliance with Article 5 of the Regulation,
repo transactions, investment securities and commodity lending transactions are accounted for “Counterparty Credit Risk”. The Bank applies “Fair Value
Measurement” in the calculation of “Counterparty Credit Risk”.