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VAKIFBANK
2014 ANNUAL REPORT
225
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
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, emission 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.
Factoring operations
Factoring receivables are initially recorded at their historical costs less transaction costs. They are amortized using the effective interest method, taking their
historical costs and future cash flows into account and the amortized amounts are recognized as “other interest income” in the consolidated statement of
income.
VI. INFORMATION ON FEES AND COMMISSIONS
Fees and commission received and paid are recognized according to either accrual basis of accounting or effective interest method depending on nature of
fees and commission, incomes derived from agreements and asset purchases for third parties are recognized as income when realized.
VII. INFORMATION ON FINANCIAL ASSETS
A financial asset is any asset that is cash, an equity instrument of another entity, a contractual right to receive cash or another financial asset from another
entity; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity.
Financial assets except for measured at fair value through profit or loss are recognized initially with their transaction costs that are directly attributable to the
acquisition or issue of the financial asset. Purchase and sale transactions of securities are accounted at settlement dates.
Financial assets are classified in four categories; as financial assets at fair value through profit or loss, available-for-sale financial assets, held-to-maturity
investments, and loans and receivables.
Financial assets at fair value through profit or loss
Financial assets, which are classified as “financial assets at fair value through profit or loss”, are trading financial assets and are either acquired for generating
profit from short-term fluctuations in the price or dealer’s margin, or are the financial assets included in a portfolio in which a pattern of short-term profit
making exists independent from the acquisition purpose.
Such assets are measured at their fair values and gain/loss arising is recorded in the consolidated statement of income. Interest income earned on trading
securities and the difference between their acquisition costs and fair values are recorded as interest income in the consolidated statement of income. The
gains/losses in case of disposal of such securities before their maturities are recorded under trading income/losses in the consolidated statement of income.