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VAKIFBANK
2014 ANNUAL REPORT
233
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
Cash and cash equivalents
Cash 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 and
other banks, whereas cash equivalents consists of money market placements and time deposits at banks and marketable securities whose original maturity is
less than 3 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”.
Insurance operations of the Group
Written Premiums:
Written premiums represent premiums on policies written during the year net of taxes and premiums of the cancelled policies produced in
previous years. Written premiums, net off ceded are recorded under other operating income in the accompanying consolidated statement of income.
Reserve for unearned premiums:
Reserve for unearned premiums represents the proportions of the premiums written in a period that relate to the period
of risk subsequent to the balance sheet date, without deductions of commission or any other expense. Reserve for unearned premiums is calculated for all
contracts except for the insurance contracts for which the Group provides mathematical reserve. Reserve for unearned premiums is also calculated for the
annual premiums of the annually renewed long-term insurance contracts. Reserve for unearned premiums is presented under “insurance technical provisions”
in the accompanying consolidated financial statements.
Reserve for outstanding claims:
Reserve for outstanding claims is provided for the outstanding claims, which incurred and reported but not yet settled in
current or previous years based on reported balances or estimates when actual balances are not exactly known and incurred but not yet reported claims
(“IBNR”). IBNR and subrogation and salvage reimbursements are recognized as the highest of the amount calculated based on historical data and results of
actuarial chain ladder method. Reserve for outstanding claims is presented under “insurance technical provisions” in the accompanying consolidated financial
statements.
Mathematical provisions:
Mathematical provisions are the provisions recorded against the liabilities of the Group to the beneficiaries of long-term life and
individual accident policies based on actuarial assumptions. Mathematical provisions consist of actuarial mathematical provisions savings and profit sharing
reserves.
Actuarial mathematical provisions are calculated as the difference between the net present values of premiums written in return of the risk covered by the
Group and the liabilities to policyholders for long-term insurance contracts based on the basis of actuarial mortality assumptions as approved by the Republic
of Turkey Prime Ministry Under secretariat of Treasury, which are applicable for Turkish insurance companies. Mathematical provision also includes the saving
portion of the provisions for saving life product.
Profit sharing reserves are the reserves provided against income obtained from asset backing saving life insurance contracts. These contracts entitle the
beneficiaries of those contracts to a minimum guaranteed crediting rate per annum or, when higher, a bonus rate declared by the Group from the eligible
surplus available to date.
Mathematical provisions are presented under “insurance technical provisions” in the accompanying consolidated financial statements.
Deferred acquisition cost and deferred commission income:
Commissions given to the intermediaries and other acquisition costs that vary with and are related
to securing new contracts and renewing existing insurance contracts are capitalized as deferred acquisition cost. Deferred acquisition costs are amortized on a
straight-line basis over the life of the contracts. Commission income obtained from the premiums ceded to reinsurance firms are also deferred and amortized
on a straight-line basis over the life of the contracts.