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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
Liability adequacy test:
At each reporting date, a liability adequacy test is performed, to ensure the adequacy of unearned premiums net of related deferred
acquisition costs. In performing this test, current best estimates of future contractual cash flows, claims handling and policy administration expenses are used.
Any inadequacy is immediately charged to the statement of income by establishing an unexpired risk provision under “insurance technical provisions” in the
accompanying consolidated financial statements.
If the result of the test is that a loss is required to be recognised, the first step is to reduce any intangible item arising from business combinations related to
insurance. If there is still a loss remaining, then the deferred acquisition cost is reduced to the extent that expense loadings are considered not recoverable.
Finally, if there is a still remaining amount of loss, this should be booked as an addition to the reserve for premium deficiency.
Individual pension business
Individual pension system receivables
presented under ‘other assets’ in the accompanying consolidated financial statements consists of ‘receivables from the
clearing house on behalf of the participants’. Pension funds are the mutual funds that the individual pension companies invest in, by the contributions of the
participants. Shares of the participants are kept at the clearing house on behalf of the participants.
‘Receivables from the clearing house on behalf of the participants’ is the receivable from the clearing house on pension fund basis against the contributions of
the participants. The same amount is also recorded as payables to participants for the funds acquired against their contributions under the ‘individual pension
system payables’.
In addition to the ‘payables to participants’ account, mentioned in the previous paragraph, individual pension system payables also includes participants’
temporary accounts, and payables to individual pension agencies. The temporary account of participants includes the contributions of participants that have
not yet been invested. Individual pension system payables are presented under other liabilities and provisions in the accompanying consolidated financial
statements.
Fees received from individual pension business consist of investment management fees, fees levied on contributions and entrance fees. Fees received from
individual pension business are recognised in other income in the accompanying consolidated statement of comprehensive income.