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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
Held to maturity investments, available-for-sale financial assets and loans and receivables
Held to maturity investments
are the financial assets with fixed maturities and pre-determined payment schedules that the Bank has the intent and ability to
hold until maturity, excluding loans and receivables.
There are no financial assets that are not allowed to be classified as held-to-maturity investments for two years due to the tainting rules applied for the breach
of classification rules.
Held-to-maturity investments are measured at amortized cost using effective interest method after deducting impairments, if any.
Available-for-sale financial assets are the financial assets other than assets held for trading purposes, held-to-maturity investments and loans and receivables.
Available-for-sale financial assets
are initially recorded at cost and subsequently measured at their fair values. Assets that are not traded in an active market
are measured by valuation techniques, including recent market transactions in similar financial instruments, adjusted for factors unique to the instrument
being valued; or discounted cash flow techniques for the assets which do not have a fixed maturity. Unrecognized gains or losses calculated as the difference
between the fair values and the discounted values of available for sale financial assets are recorded in “valuation differences of the marketable securities”
under the equity. In case of sales, the realized gain or losses are recognized directly in the consolidated statement of income.
Purchase and sales of investment securities are recognized at the date of delivery. The changes in fair value of assets during the period between trade date
and settlement date are accounted for in financial assets at fair value through profit or loss, available-for-sale financial assets and financial assets held for
trading in the settlement date-accounting policy.
Loan and receivables
are the financial assets raised by the Bank providing money, commodity and services to debtors. Loans are financial assets with fixed or
determinable payments and not quoted in an active market.
Loans and receivables are recorded at cost and measured at amortized cost by using effective interest method. The duties paid, transaction expenditures and
other similar expenses on assets received against such risks are considered as a part of transaction cost and charged to customers.
Associates and subsidiaries
The subsidiaries are enterprises that gain favour from managing Bank’s financial and operation policies. In unconsolidated financial tables, subsidiaries are
accounted in accordance with TAS 39. If subsidiaries are traded at organized markets and the fair values of these subsidiaries can be determined, these
subsidiaries are accounted with their fair values. Otherwise, subsidiaries are accounted with their cost values after deducting impairment and provision in the
financial tables.
In unconsolidated financial tables, associates are accounted in accordance with TAS 39. If associates are traded at organized markets and the fair values of
these associates can be determined, these associates are accounted with their fair values. Otherwise, associates are accounted with their cost values after
deducting impairment and provision in the financial tables.
VIII. INFORMATION ON IMPAIRMENT OF FINANCIAL ASSETS
Financial assets or group of financial assets are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. If any
such indication exists, the Group estimates the amount of impairment.
Impairment loss incurs if, and only if, there is objective evidence that the expected future cash flows of financial asset or group of financial assets are adversely
affected by an event(s) (loss event(s)) incurred subsequent to recognition. The losses expected to incur due to future events are not recognized even if the
probability of loss is high.
If there is an objective evidence that certain loans will not be collected, for such loans; the Bank provides specific and general allowances for loan and other
receivables classified in accordance with the Regulation on Identification of and Provision against Non-Performing Loans and Other Receivables published on
the Official Gazette no. 26333 dated 1 November 2006 and the amendments to this regulation. The allowances are recorded in the statement of income of the
related period.