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VAKIFBANK
2014 ANNUAL REPORT
247
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
In this process, the effect of market conditions and probable changes in economic environment on capital is evaluated, additionally loan expansion
expectations, funding resources, liquidity opportunities issues and risk profile and risk appetite of the Parent Bank are considered in accordance with the
strategies and objectives of the Parent Bank. Capital adequacy is evaluated in terms of strategic plan and growth expectations of the Parent Bank for the year
2015 and accordingly capital increasing actions has taken in the current year.
In assessment process of internal capital requirement, credit risk, market risk, operational risk, interest rate risk arising from banking accounts, liquidity risk,
reputation risk, residual risk, concentration risk, counterparty credit risk, sovereign risk and settlement risk are considered, and policies and implementing
procedures for assessing and managing these risks are defined and approved by Board of Directors of the Parent Bank. Assessment process of internal capital
requirement is handled as a developing process, action plans according to aforementioned policies and implementing procedures are formed and studies are in
progress.
II. CONSOLIDATED CREDIT RISK
Credit risk is defined as the counterparty’s possibility of failing to fulfil its obligations on the terms set by the agreement. Credit risk means risks and losses that
may occur if the counterparty fails to comply with the agreement’s requirements and cannot perform its obligations partially or completely on the terms set. It
covers the possible risks arising from futures and option agreements and other agreements alike and the credit risks arising from credit transactions that have
been defined by the Banking Law.
In compliance with the articles 51 and 54 set forth in Banking Law and ancillary regulation, credit limits are set by the Parent Bank for the financial position
and credit requirements of customers within the authorization limits assigned for branches, regional directorates, lending departments, assistant general
manager responsible of lending, general manager, credit committee and board of directors and credits are given regarding these limits in order to limit credit
risk in lending facilities.
Credit limits are determined separately for the individual customer, company, group of companies, risk groups on a product basis. In accordance with the
related Lending Policy, several criteria are used in the course of determining these credit limits. Customers should have a long-standing and a successful
business past, a high commercial morality, possess a good financial position and a high morality, the nature of their business should be appropriate to use
the credit, possess their commercial operations in an affirmative and a balanced manner, have experience and specialization in their profession, be able to
adopt themselves to the economic conditions, to be accredited on the market, have sufficient equity capital, possess the ability to create funds with their
operations and finance their placement costs. Also the sector and the geographical position of customers, where they operate and other factors that may
affect their operations are considered in the evaluation process of loans. Apart from ordinary intelligence operations, the financial position of the customer is
mainly analyzed based on the balance sheets and the income statements for the six-months periods (June and December) provided by the loan customer,
the documents received in accordance with the related regulation for their state of accounts and other related documents. Credit limits are subject to revision
regarding the overall economic developments and the changes in the financial information and operations of the customers.
Collaterals for the credit limits are determined on a customer basis in order to ensure bank placements and their liquidity. The amount and type of the
collateral are determined regarding the creditworthiness of the credit users. The Bank holds collateral against loans and advances to customers in the form of
mortgage interests over property, other registered securities over assets, and guarantees.
The Bank has risk control limits on positions arising from forwards, options and similar derivative transaction positions, which effect credit risk and market risk.
For credit risk management purposes, Risk Management Department operates in
• the determination of credit risk policies in coordination with the Bank’s other units,
• the determination and monitoring of the distribution of concentration limits with respect to sector, geography and credit type,
• contribution to the formation of rating and scoring systems,
• submiting to the Board of Directors and the senior management of not only credit risk management reports about credit portfolio’s distribution (borrower,
sector, geographical region), credit quality (impaired loans, credit risk ratings) and credit concentration but also scenario analysis reports, stress tests and
other analyses,
• studies regarding the formation of advanced credit risk measurement approaches.