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FINANCIAL HIGHLIGHTS AND RISK MANAGEMENT
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TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI AND ITS FINANCIAL SUBSIDIARIES
CONSOLIDATED FINANCIAL REPORT AS AT AND
FOR THE YEAR 31 DECEMBER 2014
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE I. OF SECTION THREE
Vakıf Gayrimenkul Yatırım Ortaklığı A.Ş.
was established as the first real estate investment partnership in finance sector under the adjudication of Capital
Markets Law in 1996. The Company’s main operation is in line with the scope in the Capital Markets Board’s regulations relating to real estate investment
trusts like, real estates, capital market tools based on real estates, real estate projects and investment on capital market tools. Its head office is in Istanbul.
Vakıf Menkul Kıymet Yatırım Ortaklığı AŞ
was established in 1991 in Istanbul. The main operation of the Company is to invest a portfolio including marketable
debt securities, equity securities without having managerial power in the partnerships whose securities have been acquired; and gold and other precious
metals traded in national and international stock exchange markets or active markets other than stock exchange markets, in accordance with the principles and
regulations promulgated by Capital Markets Board. Its head office is in Istanbul.
Pursuant to the 4 March 2010 dated and 764 numbered decision of Board of Directors of Central Bank of Turkish Republic of Northern Cyprus, the official
authorisation of World Vakıf UBB Ltd, a subsidiary which was subject to consolidation in previous periods, is abrogated due to incompliance with the 7th and
9th articles of 41/2008 numbered Law of International Banking Units. World Vakıf UBB Ltd. will be liquidated according to 24 May 2010 dated decision of the
Nicosia Local Court. Therefore, the financial statements of the company have not been consolidated as at 31 December 2014 and 31 December 2013 but its
equity until the liquidation decision date has included in the accompanying consolidated financial statements.
The liquidation process of World Vakıf Off UBB Ltd, an associate of the Parent Bank, has been carried out by NCTR Collecting and Liquidation Office. The
application of the company for cancellation of the liquidation has been rejected and the decision of liquidation has been agreed. Thus, the company’s name
has been changed as “World Vakıf UBB Ltd in Liquidation”.
As per the resolution of the Board of Directors of the Parent 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 dissolution 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 2014 and 31 December 2013, but its equity until the merger date has been
included in the accompanying consolidated financial statements.
Investments in associates consolidated per equity method
As at and for the year ended 31 December 2014, the financial statements of Kıbrıs Vakıflar Bankası Ltd. and Türkiye Sınai Kalkınma Bankası A.Ş. have been
consolidated per 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 A.Ş.
was established in 1950 to support investments in all economic 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.