Türkiye Garanti Bankası Anonim Şirketi Unconsolidated Financial Statements As of and For the Year Ended 31 December 2016 (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish) With Independent Auditors' Report Thereon
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DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik AŞ 30 January 2017 This report contains "Independent Auditors' Report" comprising 2 pages and;"Unconsolidated Financial Statements and Related Disclosures and Footnotes"comprising 128 pages. |
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of Türkiye Garanti Bankası A.Ş.
Report on the Financial Statements
We have audited the accompanying unconsolidated financial statements of Türkiye Garanti Bankası A.Ş. ("the Bank"), which comprise the unconsolidated balance sheet as at 31 December 2016, and the unconsolidated statement of income, statement of income and expense items under shareholders' equity, statement of changes in shareholders' equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Bank Management is responsible for the preparation and fair presentation of the financial statements in accordance with "the Banking Regulation and Supervision Agency ("BRSA") Accounting and Reporting Regulation" which includes the regulation on "The Procedures and Principles Regarding Banks' Accounting Practices and Maintaining Documents" published in the Official Gazette dated 1 November 2006 with No. 26333, and other regulations on accounting records of banks published by the Banking Regulation and Supervision Board and circulars and pronouncements published by the BRSA and Turkish Accounting Standards for the matters not regulated by the aforementioned legislations and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the regulation on "Independent Auditing of Banks" published in the Official Gazette dated 2 April 2015 with No. 29314 and Independent Auditing Standards which is a part of Turkish Auditing Standards published by the Public Oversight Accounting and Auditing Standards Authority ("POA"). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.
Basis for Qualified Opinion
Subsequent to the reversal of TL 30,000 thousands in the current period the accompanying unconsolidated financial statements include a general reserve amounting to TL 300,000 thousands as of the balance sheet date, provided by the Bank Management in prior periods in line with conservatism principle considering the circumstances which may arise from any changes in the economy or market conditions.
Qualified Opinion
In our opinion, except for the effect of the matter described in the basis for qualified opinion paragraph, the unconsolidated financial statements present fairly, in all material respects, the financial position of Türkiye Garanti Bankası A.Ş. as at 31 December 2016 and the results of its operations and its cash flows for the year then ended in accordance with the BRSA Accounting and Reporting Regulations.
Report on Other Legal and Regulatory Requirements
In accordance with paragraph four of the Article 402 of the Turkish Commercial Code No. 6102 ("TCC"), nothing has come to our attention that may cause us to believe that the Bank's set of accounts for the period 1 January-31 December 2016 does not comply with TCC and the provisions of the Bank's articles of association in relation to financial reporting.
In accordance with paragraph four of the Article 402 of TCC, the Board of Directors provided us all the required information and documentation with respect to our audit.
Additional paragraph for English translation
The effect of the differences between the accounting principles summarized in Section 3 and the accounting principles generally accepted in countries in which the accompanying financial statements are to be distributed and International Financial Reporting Standards (IFRS) have not been quantified and reflected in the accompanying financial statements. The accounting principles used in the preparation of the accompanying financial statements differ materially from IFRS. Accordingly, the accompanying financial statements are not intended to present the Bank's financial position and results of its operations in accordance with accounting principles generally accepted in such countries of users of the financial statements and IFRS.
DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK AŞ
Member of DELOITTE TOUCHE TOHMATSU LIMITED
Müjde Şehsuvaroğlu
Partner
Istanbul, 30 January 2017
(Convenience Translation of Financial Statements and Related Disclosures and Footnotes
Originally Issued in Turkish)
TÜRKİYE GARANTİ BANKASI ANONİM ŞİRKETİ
UNCONSOLIDATED FINANCIAL REPORT
AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2016
Levent Nispetiye Mah.Aytar Cad.
No:2 Beşiktaş 34340 Istanbul
Telephone: 212 318 18 18
Fax: 212 216 64 22
www.garanti.com.tr
The unconsolidated year-end financial report prepared in accordance with the communiqué of Financial Statements and Related Disclosures and Footnotes to be Announced to Public by Banks as regulated by Banking Regulation and Supervision Agency, is comprised of the following sections:
1. General Information about the Bank
2. Unconsolidated Financial Statements of the Bank
3. Accounting Policies
4. Financial Position and Results of Operations, and Risk Management Applications of the Bank
5. Disclosures and Footnotes on Unconsolidated Financial Statements
6. Other Disclosures and Footnotes
7. Independent Auditors' Report
The unconsolidated financial statements and related disclosures and footnotes that were subject to independent audit, are prepared in accordance with the Regulation on Accounting Applications for Banks and Safeguarding of Documents, Turkish Accounting Standards, Turkish Financial Reporting Standards and the related statements and guidances, and in compliance with the financial records of our Bank and, unless stated otherwise, presented in thousands of Turkish Lira (TL).
Ferit F. Şahenk | Ali Fuat Erbil | Aydın Güler | Hakan Özdemir |
Board of Directors Chairman | General Manager | Financial Reporting Executive Vice President | General Accounting Senior Vice President |
| Javier Bernal Dionis | Jorge Saenz - Azcunaga Carranza | |
| Audit Committee Member | Audit Committee Member | |
The authorized contact person for questions on this financial report:
Name-Surname/Title: Handan SAYGIN/Senior Vice President of Investor Relations
Phone no: 90 212 318 23 50
Fax no: 90 212 216 59 02
I. History of the bank including its incorporation date, initial legal status, amendments to legal status 1
II. Bank's shareholder structure, management and internal audit, direct and indirect shareholders, change
in shareholder structure during the year and information on bank's risk group 1
III. Information on the bank's board of directors chairman and members, audit committee members, chief
executive officer, executive vice presidents and their shareholdings in the bank 2
IV. Information on the bank's qualified shareholders 3
V. Summary information on the bank's activities and services 4
VI. Current or likely actual or legal barriers to immediate transfer of equity or repayment of debts between the bank and its affiliates 4
I. Balance sheet - Assets 5
II. Balance sheet - Liabilities 6
III. Off-balance sheet items 7
IV. Income statement 8
V. Statement of income/expense items accounted under shareholders' equity 9
VI. Statement of changes in shareholders' equity 10
VII. Statement of cash flows 11
VIII. Statement of profit distribution 12
I. Basis of presentation 13
II. Strategy for use of financial instruments and foreign currency transactions 13
III. Investments in associates and affiliates 14
IV. Forwards, options and other derivative transactions 14
V. Interest income and expenses 15
VI. Fees and commissions 15
VII. Financial assets 15
VIII. Impairment of financial assets 16
IX. Netting and derecognition of financial instruments 17
X. Repurchase and resale agreements and securities lending 17
XI. Assets held for sale, discontinued operations and related liabilities 18
XII. Goodwill and other intangible assets 18
XIII. Tangible assets 18
XIV. Leasing activities 19
XV. Provisions and contingent liabilities 19
XVI. Contingent assets 20
XVII. Liabilities for employee benefits 20
XVIII. Taxation 22
XIX. Funds borrowed 23
XX. Share issuances 23
XXI. Confirmed bills of exchange and acceptances 24
XXII. Government incentives 24
XXIII. Segment reporting 24
XXIV. Other disclosures 25
I. Capital 26
II. Credit risk 30
III. Currency risk 39
IV. Interest rate risk 41
V. Position risk of equity securities 44
VI. Liquidity risk 46
VII. Leverage ratio 52
VIII. Fair values of financial assets and liabilities 53
IX. Transactions carried out on behalf of customers and items held in trust 54
X. Risk management objectives and policies 54
I. Assets 72
II. Liabilities 97
III. Off-balance sheet items 106
IV. Income statement 111
V. Statement of changes in shareholders' equity 118
VI. Statement of cash flows 119
VII. Related party risks 121
VIII. Domestic, foreign and off-shore branches or equity investments, and foreign representative offices 124
IX. Matters arising subsequent to balance sheet date 125
I. Bank's latest international risk ratings 126
II. Dividends 127
III. Other disclosures 127
I. Disclosures on independent auditors' report 128
II. Disclosures and footnotes prepared by independent auditors 128
1.1 History of the bank including its incorporation date, initial legal status, amendments to legal status
Türkiye Garanti Bankası Anonim Şirketi (the Bank) was established by the decree of Council of Ministers numbered 3/4010 dated 11 April 1946 as a "private bank" and its "Articles of Association" was issued in the Official Gazette dated 25 April 1946.
Following the acquisition on 27 July 2015, Banco Bilbao Vizcaya Argentaria SA (BBVA)'s stake in the Bank has reached to 39.90% and BBVA has become the main shareholder. Accordingly, the Bank was moved to the "Foreign Deposit Banks" category from the "Private Deposit Bank" category by the Banking Regulation and Supervision Agency (the BRSA).
The Bank provides banking services through 959 domestic branches, nine foreign branches and three representative offices abroad. The Bank's head office is located in Istanbul.
1.2 Bank's shareholder structure, management and internal audit, direct and indirect shareholders, change in shareholder structure during the period and information on bank's risk group
As of 31 December 2016, group of companies under BBVA that currently owns 39.90% shares of the Bank, is named the BBVA Group (the Group) and it is the main shareholder.
On 22 March 2011, BBVA had acquired; 78.120.000.000 shares of the Bank owned by GE Capital Corporation at a total nominal value of TL 781,200 thousands representing 18.60% ownership, and 26.418.840.000 shares of the Bank owned by Doğuş Holding AŞ at a total nominal value of TL 264,188 thousands representing 6.29% ownership. BBVA, purchasing 24.89% shares of the Bank, had joint control on the Bank's management together with group of companies under Doğuş Holding AŞ (the Doğuş Group).
Subsequently, on 7 April 2011, BBVA had acquired 503.160.000 shares at a nominal value of TL 5,032 thousands and increased its ownership in the Bank's share capital to 25.01%. Accordingly, BBVA and the Doğuş Group continued to have mutual control on the Bank's management.
Finally, in accordance with the terms of the agreement between BBVA and the Doğuş Group which was previously disclosed on 19 November 2014, the sale of shares representing 14.89% of the share capital of the Bank with a face value of TL 625,380 thousands and 62.538.000.000 shares by the Doğuş Group to BBVA, has been completed on 27 July 2015. Following the acquisition, BBVA's stake in the Bank has reached to 39.90% and BBVA has become the main shareholder. The Bank was moved to "Foreign Deposit Banks" category from "Private Deposit Bank" category by the BRSA.
As of balance sheet date, the Doğuş Group's interest in the share capital of the Bank is at 10%.
BBVA Group
BBVA is operating for more than 150 years, providing variety of wide spread financial and non-financial services to over 47 million retail and commercial customers.
The Group's headquarter is in Spain, where the Group has concrete leadership in retail and commercial markets. BBVA adopting innovative, and customer and community oriented management style, besides banking, operates in insurance sector in Europe and portfolio management, private banking and investment banking in global markets.
BBVA that owns a bank being the largest financial institution in Mexico, the market leader in South America, and one of the largest 15 commercial banks in United States, operates in more than 30 countries with more than 100 thousand employees.
Doğuş Group
The Doğuş Group that was established in 1951 initially for investments in construction sector, operates in seven sectors namely financial services, automotive, construction, real estate, tourism, media and energy with 132 companies and more than 30 thousand employees.
The major worldwide joint ventures of the Group are; Volkswagen AG and TÜVSÜD in automotive, CNBC, MSNBC and Condé Nast in media and, Hyatt International Ltd and HMS International Hotel GmbH (Maritim) in tourism.
The major investments of the Group in financial sector are; Türkiye Garanti Bankası AŞ, Garanti Bank International NV, Garanti Bank SA, Garanti Finansal Kiralama AŞ, Garanti Faktoring AŞ, Garanti Yatırım Menkul Kıymetler AŞ, Garanti Portföy Yönetimi AŞ, Garanti Emeklilik ve Hayat AŞ, Doğuş Gayrimenkul Yatırım Ortaklığı AŞ and Volkswagen Doğuş Tüketici Finansmanı AŞ.
1.3 Information on the bank's board of directors chairman and members, audit committee members, chief executive officer, executive vice presidents and their shareholdings in the bank
Board of Directors Chairman and Members:
Name and Surname | Responsibility | Appointment Date | Education | Experience in Banking and Business Administration |
Ferit Faik Şahenk | Chairman | 18.04.2001 | University | 26 years |
Süleyman Sözen | Vice Chairman | 08.07.2003 | University | 34 years |
Dr. Muammer Cüneyt Sezgin | Member | 30.06.2004 | PhD | 28 years |
Jorge Saenz Azcunaga Carranza | Independent Member of BOD and Audit Committee | 31.03.2016 | University | 22 years |
Jaime Saenz de Tejada Pulido | Member | 02.10.2014 | University | 23 years |
Maria Isabel Goiri Lartitegui | Member | 27.07.2015 | Master | 26 years |
Javier Bernal Dionis | Independent Member of BOD and Audit Committee | 27.07.2015 | Master | 26 years |
Inıgo Echebarria Garate | Member | 31.03.2016 | Master | 33 years |
Belkıs Sema Yurdum | Independent Member | 30.04.2013 | University | 36 years |
Sait Ergun Özen | Member | 14.05.2003 | University | 29 years |
Ali Fuat Erbil | Member and CEO | 02.09.2015 | PhD | 24 years |
CEO and Executive Vice Presidents:
Name and Surname | Responsibility | Appointment Date | Education | Experience in Banking and Business Administration |
Ali Fuat Erbil | CEO | 02.09.2015 | PhD | 24 years |
Gökhan Erün | EVP-Corporate Banking and Treasury Deputy CEO | 01.09.2005 | Master | 22 years |
Onur Genç | EVP-Retail Banking Deputy CEO | 20.03.2012 | Master | 17 years |
Faruk Nafiz Karadere | EVP-SME Banking | 01.05.1999 | University | 34 years |
Halil Hüsnü Erel | EVP-Technology, Operation Center, Marketing and Business Development | 16.06.1997 | University | 41 years |
Recep Baştuğ | EVP-Commercial Banking | 01.01.2013 | University | 26 years |
Avni Aydın Düren | EVP-Legal Services | 01.02.2009 | Master | 22 years |
Betül Ebru Edin | EVP-Project Finance | 25.11.2009 | University | 22 years |
Osman Nuri Tüzün | EVP- Human Resources and Support Services | 19.08.2015 | Master | 24 years |
Aydın Güler | EVP-Finance and Accounting | 03.02.2016 | University | 26 years |
Ali Temel | Head of Credit Risk Management | 03.02.2016 | University | 26 years |
Didem Başer | EVP-Digital Banking | 20.03.2012 | Master | 21 years |
Changes in the executive board as of 1 January 2017;
- Nafiz Karadere resigned from his duty as EVP-SME Banking.
- Onur Genç resigned from his duty as EVP-Retail Banking and Deputy CEO.
Changes in the executive board as of 17 January 2017;
- Cemal Onaran is assigned as EVP-SME Banking.
- Gökhan Erun is responsible EVP of Financial Institutions, Corporate Banking and Treasury.
- Mahmut Akten is assigned as EVP-Retail Banking and is responsible for Retail Banking, Mass Retail Banking and Affluent Banking Marketing units.
- Didem Dinçer is responsible EVP of Corporate Brand Management and Marketing Communications, Insurance and Pension Coordination, Call Center, Customer Experience and Satisfaction.
The top management listed above does not hold any unquoted shares of the Bank.
1.4 Information on the bank's qualified shareholders
Name / Company | Shares | Ownership | Paid-in Capital | Unpaid Portion |
Banco Bilbao Vizcaya Argentaria SA | 1,675,800 | 39,9000% | 1,675,800 | - |
Doğuş Holding AŞ | 259,846 | 6,1868% | 259,846 | - |
According to the decision made at the "General Assembly of Founder Shares Owners" and the "Extraordinary General Shareholders" meetings held on 13 June 2008, the Bank repurchased all the 370 founder share-certificates issued in order to redeem and exterminate them, subsequent to the permissions obtained from the related legal authorities, at a value of TL 3,876 thousands each in accordance with the report prepared by the court expert and approved by the Istanbul 5th Commercial Court of First Instance. A total payment of TL 1,434,233 thousands has been made to the owners of 368 founder share-certificates from "extraordinary reserves", and the value of remaining 2 founder share-certificates has been blocked in the bank accounts.
Subsequent to these purchases, the clauses 15, 16 and 45 of the Articles of Association of the Bank have been revised accordingly.
1.5 Summary information on the bank's activities and services
Activities of the Bank as stated at the third clause of its Articles of Association are as follows:
· All banking operations,
· Participating in, establishing, and trading the shares of enterprises at various sectors within the limits setforth by the Banking Law;
· Providing attorneyship, insurance agency, brokerage and freight services in relation with banking activities,
· Purchasing/selling debt securities, treasury bills, government bonds and other share certificates issued by Turkish government and other official and private institutions,
· Developing economical and financial relations with foreign organizations,
· Dealing with all economic operations in compliance with the Banking Law.
The Bank's activities are not limited to those disclosed in that third clause, but whenever the Board of Directors deems any operations other than those stated above to be of benefit to the Bank, it is recommended in the general meeting, and the launching of the related project depends on the decision taken during the General Assembly which results in a change in the Articles of Association and on the approval of this decision by the Ministry of Industry and Commerce. Accordingly, the approved decision is added to the Articles of Association.
The Bank is not a specialized bank but deals with all kinds of banking activities. Deposits are the main sources of the lendings to the customers. The Bank grants loans to companies operating in various sectors while aiming to maintain the required level of efficiency.
The Bank also grants non-cash loans to its customers; especially letters of guarantee, letters of credit and acceptance credits.
1.6 Current or likely actual or legal barriers to immediate transfer of equity or repayment of debts between the bank and its affiliates
None.
3 Accounting policies
3.1 Basis of presentation
The Bank prepares its financial statements in accordance with the BRSA Accounting and Reporting Regulation" which includes the regulation on "The Procedures and Principles Regarding Banks' Accounting Practices and Maintaining Documents" published in the Official Gazette dated 1 November 2006 with No. 26333, and other regulations on accounting records of banks published by the Banking Regulation and Supervision Board and circulars and pronouncements published by the BRSA and Turkish Accounting Standards published by the Public Oversight Accounting and Auditing Standards Authority for the matters not regulated by the aforementioned legislations.
The accompanying unconsolidated financial statements are prepared in accordance with the historical cost basis except for financial instruments at fair value through profit or loss, financial assets available for sale, real estates and investments in affiliates valued at equity basis of accounting.
The accounting policies and the valuation principles applied in the preparation of the accompanying financial statements are explained in Notes 3.2 to 3.24.
3.2 Strategy for use of financial instruments and foreign currency transactions
3.2.1 Strategy for use of financial instruments
The liability side of the Bank's balance sheet is intensively composed of short-term deposits in line with the general trend in the banking sector. In addition to deposits, the Bank has access to longer-term borrowings via the borrowings from abroad.
In order to manage the interest rate risk arising from short-term deposits, the Bank is keen on maintaining floating rate instruments such as government bonds with quarterly coupon payments and instruments like credit cards and consumer loans providing regular cash inflows.
A portion of the fixed-rate securities and loans, and the bonds of the Bank are hedged under fair value hedges. The fair value risks of such fixed-rate assets and financial liabilities are hedged with interest rate swaps and cross currency swaps. The fair value changes of the hedged fixed-rate financial assets and financial liabilities together with the changes in the fair value of the hedging instruments, namely interest rate swaps and cross currency swaps, are accounted under net trading income/losses in the income statement. At the inception of the hedge and during the subsequent periods, the hedge is expected to achieve the offsetting of changes in fair value attributable to the hedged risk for which the hedge is designated, and accordingly, the hedge effectiveness tests are performed.
The Bank may classify its financial assets and liabilities as at fair value through profit or loss, at the initial recognition in order to eliminate any accounting inconsistency.
The fundamental strategy to manage the liquidity risk that may incur due to short-term structure of funding, is to expand the deposit base through customer-oriented banking philosophy, and to increase customer transactions and retention rates. The Bank's widespread and effective branch network, advantage of primary dealership and strong market share in the treasury and capital markets, are the most effective tools in the realisation of this strategy. For this purpose, serving customers by introducing new products and services continuously and reaching the customers satisfaction are very important.
Another influential factor in management of interest and liquidity risks on balance sheet is product diversification both on asset and liability sides.
Exchange rate risk, interest rate risk and liquidity risk are controlled and measured by various risk management systems, and the balance sheet is managed under the limits set by these systems and the limits legally required. Asset-liability management and value at risk models, stress tests and scenario analysis are used for this purpose.
Purchase and sale of short and long-term financial instruments are allowed within the pre-determined limits to generate risk-free return on capital.
The foreign currency position is controlled by the equilibrium of a currency basket to eliminate the foreign exchange risk.
3.2.2 Foreign currency transactions
Foreign exchange gains and losses arising from foreign currency transactions are recorded at transaction dates. At the end of the periods, foreign currency assets and liabilities evaluated with the Bank's spot purchase rates and the differences are recorded as foreign exchange gain or loss in the income statement.
In the unconsolidated financial statements, the financial affiliates are accounted for using the equity method in accordance with the Communique published on the Official Gazette dated 9 April 2015 no. 29321 related to the amendments to the Turkish Accounting Standard 27 (TAS 27) "Separate Financial Statements". In this context, foreign affiliates' asset and liability items in the balance sheet are translated into Turkish Lira by using foreign exchange rates as of the balance sheet date whereas income and expense items are translated into Turkish Lira by using average foreign exchange rates for the related period. Foreign exchange differences arising from translation of income and expense items and other equity items are accounted under capital reserves under equity.
From 1 September 2015, it has been started to apply net investment hedge amounting to EUR 333,487,913 in total among net investments in Garanti Bank International NV and Garanti Holding BV having capitals denominated in foreign currencies and long term foreign currency borrowings. Foreign exchange losses in the amount of TL 147,648 thousands, arising from conversion of both foreign currency net investments and long term foreign currency borrowings are accounted under capital reserves and hedging reserves, respectively under equity as of 31 December 2016. There is no ineffective portion arising from net investment hedge accounting.
3.3 Investments in associates and affiliates
In the unconsolidated financial statements, the financial affiliates are accounted for using the equity method in accordance with the Communique published on the Official Gazette dated 9 April 2015 no. 29321 related to the amendments to the Turkish Accounting Standard 27 (TAS 27) "Separate Financial Statements".
In accordance with the Turkish Accounting Standard 28 (TAS 28) for "Investments in Associates and Joint Ventures" through the equity method, the carrying value of financial affiliates are accounted in the financial statements with respect to the Bank's share in these investments' net asset value. While the Bank's share on profits or losses of financial affiliates are accounted in the Bank's income statement, the Bank's share in other comprehensive income of financial affiliates are accounted in the Bank's other comprehensive income statement.
Non-financial affiliates are accounted at cost in the financial statements after provisions for inpairment losses deducted, if any, in accordance with TMS 27.
3.4 Forwards, options and other derivative transactions
As per the Turkish Accounting Standard 39 (TAS 39) "Financial Instruments: Recognition and Measurement"; forward foreign currency purchases/sales, swaps, options and futures are classified as either "hedging purposes" or "trading purposes".
3.4.1 Derivative financial instruments held for trading
The derivative transactions mainly consist of foreign currency and interest rate swaps, foreign currency options and forward foreign currency purchase/sale contacts. There are no embedded derivatives.
Derivatives are initially recorded in off-balance sheet accounts at their purchase costs including the transaction costs. Subsequently, derivative transactions are valued at their fair values and the changes in their fair values are recorded on balance sheet under "derivative financial assets held for trading" or "derivative financial liabilities held for trading", respectively depending on the fair values being positive or negative. Fair value changes for trading derivatives are recorded under income statement.
The spot legs of currency swap transactions are recorded on the balance sheet and the forward legs in the off-balance sheet accounts as commitment.
3.4.2 Derivative financial instruments held for risk management
The Bank enters into interest rate and cross currency swap transactions in order to hedge the change in fair values of fixed-rate financial instruments. While applying fair value hedge accounting, the changes in fair values of hedging instrument and hedged item are recognised in income statement. If the hedging is effective, the changes in fair value of the hedged item is presented in statement of financial position together with the fixed-rate loan, and in case of fixed-rate financial assets available for sale, such changes are reclassified from shareholders' equity to income statement.
The Bank enters into interest rate and cross currency swap transactions in order to hedge the changes in cash flows of the floating-rate financial instruments While applying cash flow hedge accounting, the effective portion of the changes in the fair value of the hedging instrument is accounted for under hedging reserves in shareholders' equity, and the ineffective portion is recognised in income statement. The changes recognised in shareholders' equity is removed and included in income statement in the same period when the hedged cash flows effect the income or loss.
The Bank performs effectiveness test at the beginning of the hedge accounting period and at each reporting period. The effectiveness tests are carried out using the "Dollar off-set model" and the hedge accounting is applied as long as the test results are between the range of 80%-125% of effectiveness.
The hedge accounting is discontinued when the hedging instrument expires, is exercised, sold or no longer effective. When discontinuing fair value hedge accounting, the cumulative fair value changes in carrying value of the hedged item arising from the hedged risk are amortised to income statement over the life of the hedged item from that date of the hedge accounting is discontinued. While discontinuing cash flow hedge accounting, the cumulative gains/losses recognised in shareholders' equity and presented under hedging reserves are continued to be kept in this account. When the cash flows of hedged item are recognised in income statement, the gain/losses accounted for under shareholders' equity, are recognised in income statement.
3.5 Interest income and expenses
Interests are recorded according to the effective interest rate method (rate equal to the rate in calculation of present value of future cash flows of financial assets or liabilities) defined in the Turkish Accounting Standard 39 (TAS 39) "Financial Instruments: Recognition and Measurement".
In case an interest was accrued on a security before its acquisition, the collected interest is divided into two parts as interest before and after the acquisition and only the interest of the period after the acquisition is recorded as interest income in the financial statements.
The accrued interest income on non-performing loans are reversed and subsequently recognised as interest income only when collected.
3.6 Fees and commissions
Except for certain fees related with certain banking transactions and recognized when received, fees and commissions received or paid, and other fees and commissions paid to financial institutions are accounted under accrual basis of accounting. The income derived from agreements or asset purchases from real-person or corporate third parties are recognized as income when realized.
3.7 Financial assets
3.7.1 Financial assets at fair value through profit or loss
Financial assets valued at fair value through profit or loss, such assets are valued at their fair values and gain/loss arising on those assets is recorded in the income statement. Interest income earned on trading securities and the difference between their acquisition costs and amortized costs are recorded as interest income in the income statement. The differences between the amortized costs and the fair values of such securities are recorded under trading account income/losses in the income statement. In cases where such securities are sold before their maturities, the gains/losses on such sales are recorded under trading account income/losses.
The Bank classifies certain loans and securities issued at their origination dates, as financial assets/liabilities at fair value through profit or loss in compliance with TAS 39. The interest income/expense earned and the difference between the acquisition costs and the amortized costs of financial insturuments are recorded under interest income/expense in income statement, the difference between the amortized costs and the fair values of financial instruments are recorded under trading account income/losses in income statement.
3.7.2 Investments held-to-maturity, financial assets available-for-sale and loans and receivables
Financial assets are initially recorded at their purchase costs including the transaction costs.
Investments held-to-maturity are financial assets with fixed maturities and pre-determined payment schedules that the Bank has the intent and ability to hold until maturity, excluding originated loans and receivables.
There are no financial assets that are not allowed to be classified as investments held-to-maturity for two years due to the tainting rules applied for the breach of classification rules.
Investments held-to-maturity are measured at amortized costs using internal rate of return after deducting impairments, if any.
Financial assets available-for-sale, are financial assets other than assets held for trading purposes, investments held-to-maturity and originated loans and receivables.
Financial assets available-for-sale are measured at their fair values subsequently. However, assets for which fair values can not be determined reliably, are valued at amortized costs by using discounting method with internal rate of return for floating-rate securities; and by using valuation models or discounted cash flow techniques for fixed-rate securities. Unrecognised gain/losses derived from the difference between their fair values and the discounted values are recorded in "securities value increase fund" under the shareholders' equity. In case of sales, the gain/losses arising from fair value measurement under shareholders' equity are recognized in income statement.
The Bank owns consumer price indexed government bonds (CPI) portfolio. CPI's are valued and accounted according to the effective interest rate method which is calculated according to the real coupon rate and the reference inflation index on the issue date. As it is mentioned in the Undersecretariat of Treasury's Investor Guide of CPI, the reference index used during the calculation of the actual coupon payment amount is the previous two months CPI's. The bank determines its expected inflation rates in compliance with this guide. The estimated inflation rate according to the Central Bank of Turkey and the Bank's expectations, is updated during the year when it is considered necessary.
Purchase and sale transactions of securities are accounted at delivery dates.
Loans and receivables are 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 recognized at cost and measured at amortized cost using the effective interest method. Duties paid, transaction costs and other similar expenses on assets received against such risks are considered as a part of transaction cost and charged to customers.
3.8 Impairment of financial assets
Financial asset 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 Bank estimates the amount of impairment.
Impairment loss incurs if, and only if, there is an objective evidence that the expected future cash flows of financial asset or group of financial assets are adversely effected 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 (the Provisioning Regulation) published on the Official Gazette no.2633 dated 1 November 2006. The allowances are recorded in income statement of the related period.
Provisions made during the period are recorded under "provision for losses on loans and other receivables". Provisions booked in the prior periods and released in the current year are recorded under "other operating income".
3.9 Netting and derecognition of financial instruments
3.9.1 Netting of financial instruments
In cases where the fair values of trading securities, securities available-for-sale, securities quoted at the stock exchanges, associates and affiliates are less then their carrying values, a provision for impairment is allocated, and the net value is shown on the balance sheet.
The Bank provides specific allowances for non-performing loan and other receivables in accordance with the Regulation on Identification of and Provision against Non-Performing Loans and Other Receivables. Such allowances are recorded under "loans" as negative balances on the asset side.
Otherwise, the financial assets and liabilities are netted off only when there is a legal right to do so.
3.9.2 Derecognition of financial assets
The Bank derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Bank neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Bank recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Bank retains substantially all the risks and rewards of ownership of a transferred financial asset, it continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in income statement.
In case an existing financial asset is replaced with another financial asset from the same counterparty where the terms on the initial financial asset are substantially modified, the existing financial asset is derecognized and a new financial asset is recognized. The difference between the carrying values of the respective financial assets is recognized in income statement.
3.10 Repurchase and resale agreements and securities lending
Securities sold under repurchase agreements are recorded on the balance sheet in compliance with the Uniform Chart of Accounts. Accordingly, government bonds and treasury bills sold to customers under repurchase agreements are classified as "Investments Subject to Repurchase Agreements" and valued based on the Bank management's future intentions, either at market prices or using discounting method with internal rate of return. The funds received through repurchase agreements are classified separately under liability accounts and the related interest expenses are accounted for on an accrual basis.
Securities purchased under resale agreements are classified under "interbank money markets" separately. An income accrual is accounted for the positive difference between the purchase and resale prices earned during the period.
3.11 Assets held for sale, discontinued operations and related liabilities
A tangible asset (or a disposal group) classified as "asset held for sale" is measured at lower of carrying value or fair value less costs to sell. An asset (or a disposal group) is regarded as "asset held for sale" only when the sale is highly probable and the asset (disposal group) is available for immediate sale in its present condition. For a highly probable sale, there must be a valid plan prepared by the management for the sale of asset including identification of possible buyers and completion of sale process. Furthermore, the asset should be actively marketed at a price consistent with its fair value.
A discontinued operation is a part of the Bank's business classified as sold or held-for-sale. The operating results of the discontinued operations are disclosed separately in income statement. The Bank has no discontinued operations.
3.12 Goodwill and other intangible assets
The Bank's intangible assets consist of softwares, intangible rights and other intangible assets.
Goodwill and other intangible assets are recorded at cost in compliance with the Turkish Accounting Standard 38 (TAS 38) "Intangible Assets".
The costs of other intangible assets purchased before 31 December 2004 are restated from the purchasing dates to 31 December 2004, the date the hyperinflationary period is considered to be ended. The intangible assets purchased after this date are recorded at their initial purchase costs.
As per TAS 38, internally-generated softwares should be recognised as intangible assets if they meet the below listed criterias:
- The technical feasibility of completing the intangible asset so that it will be available for use,
- Availability of the Bank's intention to complete and use the intangible asset,
- The ability to use the intangible asset,
- Clarity in probable future economic benefits to be generated from the intangible asset,
- The availability of adequate technical, financial and other resources to complete the development phase and to start using the intangible asset,
- The availability to measure reliably the expenditure attributable to the intangible asset during the development phase.
The directly attributable development costs of intangible asset are included in the the cost of such assets, however the research costs are recognised as expense as incurred.
The intangible assets are amortised by the Bank over their estimated useful lives based on their inflation adjusted costs on a straight-line basis. Estimated useful lives of the Bank's intangible assets are 3-15 years, and amortisation rates are 6.67-33.3%.
If there is objective evidence of impairment, the asset's recoverable amount is estimated in accordance with the Turkish Accounting Standard 36 (TAS 36) " Impairment of Assets" and if the recoverable amount is less then the carrying value of the related asset, a provision for impairment loss is provided.
3.13 Tangible assets
The cost of the tangible assets purchased before 31 December 2004 are restated from the purchasing dates to 31 December 2004, the date the hyperinflationary period is considered to be ended. The tangible assets purchased after this date are recorded at their historical costs.
As of 1 November 2015, changing the existing accounting policy, it has been decided to apply revaluation model for properties recorded under tangible assets instead of cost model in accordance with the Turkish Accounting Standard 16 (TAS 16) "Property, Plant and Equipment". Accordingly, for all real estates registered in the ledger, a valuation study was performed by independent expertise firms.
If there is objective evidence of impairment, the asset's recoverable amount is estimated in accordance with the Turkish Accounting Standard 36 (TAS 36) " Impairment of Assets" and if the recoverable amount is less than the carrying value of the related asset, a provision for impairment loss is provided.
Gains/losses arising from the disposal of the tangible assets are calculated as the difference between the net book value and the net sale price.
Maintenance and repair costs incurred for tangible assets, are recorded as expense.
There are no restrictions such as pledges, mortgages or any other restriction on tangible assets. The depreciation rates and the estimated useful lives of tangible assets are presented below. Depreciation method in use was not changed in the current period.
Tangible assets | Estimated Useful Lives (Years) |
Depreciation Rates % |
Buildings | 50 | 2 |
Vaults | 50 | 2 |
Motor Vehicles | 5-7 | 15-20 |
Other Tangible Assets | 4-20 | 5-25 |
The depreciation of an asset held for a period less than a full financial year is calculated as a proportion of the full year depreciation charge from the date of acquisition to the financial year end.
Useful lives of buildings are reviewed at least once a year and if current estimates are different than previous estimates, then the revised estimates are considered as accounting policy change in accordance with Turkish Accounting Standard 8 (TAS 8) "Accounting Policies, Changes in Accounting Estimates and Errors".
Investment properties
Land and buildings that are held to earn rentals or for capital appreciation or both rather than for use in production, supply of goods or services, administrative purposes or sale in the ordinary course of business are clasified as investment property. As of 1 November 2015, changing the existing accounting policy, it has been decided to apply fair value model for investment properties instead of cost model in accordance with the Turkish Accounting Standard 40 (TAS 40) "Investment Property" Accordingly, for all the investment properties registered in the ledger, a valuation study was performed by independent expertise firms. Fair value changes in investment properties were accounted in the income statement for the period they occurred.
Investment properties accounted at fair value are not depreciated.
3.14 Leasing activities
Leased assets are recognized by recording an asset or a liability. In the determination of the related asset and liability amounts, the lower of the fair value of the leased asset and the present value of leasing payments is considered. Financial costs on leasing agreements are expanded in lease periods at a fixed interest rate.
In cases where leased assets are impaired or the expected future benefits of the assets are less than their book values, the book values of such leased assets are reduced to their net realizable values. Depreciation for assets acquired through financial leases is calculated consistently with the same principle as for the tangible assets.
In operating leases, the rent payments are charged to the statement of operations in equal installments.
3.15 Provisions and contingent liabilities
In the financial statements, a provision is made for an existing commitment resulted from past events if it is probable that the commitment will be settled and a reliable estimate can be made of the amount of the obligation. Provisions are calculated based on the best estimates of management on the expenses to incur as of the balance sheet date and, if material, such expenses are discounted for their present values. If the amount is not reliably estimated and there is no probability of cash outflow from the Bank to settle the liability, the related liability is considered as "contingent" and disclosed in the notes to the financial statements.
3.16 Contingent assets
The contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits to the Bank. If an inflow of economic benefits to the Bank has become probable, then the contingent asset is disclosed in the footnotes to the financial statements. If it has become virtually certain that an inflow of economic benefits will arise, the asset and the related income are recognized in the financial statements of the period in which the change occurs.
3.17 Liabilities for employee benefits
Severance indemnities and short-term employee benefits
As per the existing labour law in Turkey, the Bank is required to pay certain amounts to the employees retired or fired except for resignations or misbehaviours specified in the Turkish Labour Law.
Accordingly, the Bank reserved for employee severance indemnities in the accompanying financial statements using actuarial method in compliance with the Turkish Accounting Standard 19 (TAS 19) "Employee Benefits" for all its employees who retired or whose employment is terminated, called up for military service or died. The major actuarial assumptions used in the calculation of the total liability are as follows:
| 31 December 2016 | 31 December 2015 |
| % | % |
Net Effective Discount Rate | 3.43 | 2.99 |
Discount Rate | 11.50 | 10.30 |
Expected Rate of Salary Increase | 9.30 | 8.60 |
Inflation Rate | 7.80 | 7.10 |
The above rates are effective rates, whereas the rates applied for the calculation differ according to the employees' years-in-service.
The Bank provided for undiscounted short-term employee benefits earned during the financial periods as per services rendered in compliance with TAS 19.
The actuarial gains/losses are recognised under shareholders' equity as per the revised TAS 19.
Retirement benefit obligations
A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee (and his/her dependents) will receive on retirement.
The Bank's defined benefit plan (the "Plan") is managed by "Türkiye Garanti Bankası Anonim Şirketi Memur ve Müstahdemleri Emekli ve Yardım Sandığı Vakfı" (the Fund) established as per the provisional article 20 of the Social Security Law no.506 and the Bank's employees are the members of this Fund.
The Plan is funded through contributions of both by the employees and the employer as required by Social Security Law numbered 506. These contributions are as follows:
| 31 December 2016 | |
| Employer | Employee |
Pension contributions | 15.5% | 10.0% |
Medical benefit contributions | 6.0% | 5.0% |
The Plan is composed of a) the contractual benefits of the employees, which are subject to transfer to Social Security Foundation ("SSF") as per the Social Security Law no.5754 ("the Law"), and b) other social rights and medical benefits provided by the Bank but not transferable to SSF.
a) Benefits transferable to SSF
The first paragraph of the provisional article 23 of Banking Law no.5411, published in the Official Gazette on 1 November 2005, no.25983, which requires the transfer of the members of the funds subject to the provisional article 20 of the Social Security Law no.506, and the persons who are paid under insurance coverage for disablement, old-age and mortality and their right-holders to the SSF within three years following the effective date of the related article was cancelled with the decision of the Constitutional Court dated 22 March 2007, no.2007/33. The reasoned ruling regarding the cancellation of the Constitutional Court was published in the Official Gazette no.26731, dated 15 December 2007. The Constitutional Court stated that the reason behind this cancellation was the possible loss of antecedent rights of the fund members.
Following the publication of the verdict, the Turkish Grand National Assembly ("Turkish Parliament") started to work on the new legal arrangements by taking the cancellation reasoning into account and the articles of the Law no.5754 regulating the principles related with such transfers were accepted and approved by Turkish Parliament on 17 April 2008, and enacted on 8 May 2008 after being published in the Official Gazette no.26870.
As per the Law, the present value of post-employment benefits as at the transfer date for the fund members to be transferred, are to be calculated by a commission composing from the representatives of the SSF, the Ministry of Finance, the Undersecretariat of Treasury, the Undersecretariat of State Planning Organisation, the BRSA, the Savings Deposit Insurance Fund, the banks and the funds, by using a technical discount rate of 9.80% taking into account the funds' income and expenses as per insurance classes and the transferable contributions and payments of the funds including any salary and income differences paid by the funds above the limits of SSF for such payments.The transfers are to take place within the three-year period starting from 1 January 2008. Subsequently, the transfer of the contributors and the persons receiving monthly or regular income and their right-holders from such funds established for employees of the banks, insurance and reinsurance companies, trade chambers, stock markets and unions that are part of these organizations subject to the provisional article 20 of the Social Security Law no.506 to the SSF, has been postponed for two years. The decision was made by the Council of Ministers on 14 March 2011 and published in the Official Gazette no. 27900 dated 9 April 2011 as per the decision of the Council of Ministers, no.2011/1559, and as per the letter no. 150 of the Ministry of Labor and Social Security dated 24 February 2011 and according to the provisional article 20 of the Social Security and Public Health Insurance Law no.5510.
On 19 June 2008, Cumhuriyet Halk Partisi ("CHP") applied to the Constitutional Court for the cancellation of various articles of the Law including the first paragraph of the provisional Article 20. At the meeting of the Constitutional Court on 30 March 2011, it was decided that the first paragraph of the provisional Article 20 of the Law is not contradictory to the Constitutional Law, and accordingly the dismissal of the cancellation request has been denied with the majority of votes.
Before the completion of two-years period set by the Council of Ministers on 14 March 2011, as per the Article no. 51 of the law no. 6645, published in the Official Gazette no. 29335 dated 23 April 2015, the Article no. 20 of the law no. 5510 was amended giving the Council of Ministers the authority to determine the date of transfer without defining any timeline.
b) Other benefits not transferable to SSF
Other social rights and payments provided in the existing trust indenture but not covered through the transfer of the funds' members and their right-holders to the SSF, are to be covered by the funds and the institutions that employ the funds' members.
The actuarial gains/losses are recognised under shareholders' equity as per the revised TAS 19.
3.18 Taxation
3.18.1 Corporate tax
Effective from 1 January 2006, statutory income is subject to corporate tax at 20% in Turkey. This rate is applied to accounting income modified for certain exemptions (like dividend income) and deductions (like investment incentives), and additions for certain non-tax deductable expenses and allowances for tax purposes. If there is no dividend distribution planned, no further tax charges are made.
Dividends paid to the resident institutions and the institutions working through local offices or representatives are not subject to withholding tax. As per the decisions no.2009/14593 and no.2009/14594 of the Council of Ministers published in the Official Gazette no.27130 dated 3 February 2009, certain duty rates included in the articles no.15 and 30 of the new Corporate Tax Law no.5520 are revised. Accordingly, the withholding tax rate on the dividend payments other than the ones paid to the nonresident institutions generating income in Turkey through their operations or permanent representatives and the resident institutions is 15%. In applying the withholding tax rates on dividend payments to the nonresident institutions and the individuals, the withholding tax rates covered in the related Double Tax Treaty Agreements are taken into account. Appropriation of the retained earnings to capital is not considered as profit distribution and therefore is not subject to withholding tax.
The prepaid taxes are calculated and paid at the rates valid for the earnings of the related years. The prepayments can be deducted from the annual corporate tax calculated for the whole year earnings.
In accordance with the tax legislation, tax losses can be carried forward to offset against future taxable income for up to five years. Tax losses cannot be carried back to offset profits from previous periods.
In Turkey, there is no procedure for a final and definite agreement on tax assessments. Companies file their tax returns with their tax offices by the end of 25th of the fourth month following the close of the accounting period to which they relate. Tax returns are open for five years from the beginning of the year that follows the date of filing during which time the tax authorities have the right to audit tax returns, and the related accounting records on which they are based, and may issue re-assessments based on their findings.
The tax applications for foreign branches;
NORTHERN CYPRUS
According to the Corporate Tax Law of the Turkish Republic of Northern Cyprus no.41/1976 as amended, the corporate earnings (including foreign corporations) are subject to a 10% corporate tax and 15% income tax. This tax is calculated based on the income that the taxpayers earn in an accounting period. Tax base is determined by modifying accounting income for certain exclusions and allowances for tax purposes. The corporations cannot benefit from the rights of offsetting losses, investment incentives and amortisation unless they prepare and have certified their balance sheets, income statements and accounting records used for tax calculations by an auditor authorized by the Ministry of Finance. In cases where it is revealed that the earnings of a corporation were not subject to taxation in prior years or the tax paid on such earnings are understated, additional taxes can be charged in the next twelwe years following that the related taxation period. The corporate tax returns are filed in the tax administration office in April after following the end of the accounting year to which they relate. The corporate taxes are paid in two equal installments in May and October.
MALTA
The corporate earnings are subject to a 35% corporate tax. This rate is determined by modifying accounting income for certain exclusions and allowances for tax purposes. The earnings of the foreign corporations' branches in Malta are also subject to the same tax rate that the resident corporations in Malta are subject to. The earnings of such branches that are transferred to their head offices are not subject to an additional tax. The taxes payable is calculated by the obligating firm and the calculation is shown at the tax declaration form that is due till the following year's September and the payment is done till this date.
LUXEMBOURG
The corporate earnings are subject to a 21% corporate tax. This rate is determined by modifying accounting income for certain exclusions and allowances for tax purposes. An additional 7% of the calculated corporate income tax is paid as a contribution to unemployment insurance fund. 3% of the taxable income is paid as municipality tax in addition to corporate tax. The municipalities have the right to increase this rate up to 200%-350%. The municipality commerce tax, which the Bank's Luxembourg branch subject to currently is applied as 7.50% of the taxable income. The tax returns do not include any tax amounts to be paid.
The tax calculation is done by the tax office and the amount to be paid is declared to corporate through an official letter called Note. The amounts and the payment dates of prepaid taxes are determined and declared by the tax office at the beginning of the taxation period. The corporations whose head offices are outside Luxembourg, are allowed to transfer the rest of their net income after tax following the allocation of 5% of it for legal reserves, to their head offices.
3.18.2 Deferred taxes
According to the Turkish Accounting Standard 12 (TAS 12) "Income Taxes"; deferred tax assets and liabilities are recognized, using the balance sheet method, on all taxable temporary differences arising between the carrying values of assets and liabilities in the financial statements and their corresponding balances considered in the calculation of the tax base, except for the differences not deductible for tax purposes and initial recognition of assets and liabilities which affect neither accounting nor taxable profit.
If transactions and events are recorded in the income statement, then the related tax effects are also recognized in the income statement. However, if transactions and events are recorded directly in the shareholders' equity, the related tax effects are also recognized directly in the shareholders' equity.
The deferred tax assets and liabilities are reported as net in the financial statements.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
3.18.3 Transfer pricing
The article no.13 of the Corporate Tax Law describes the issue of transfer pricing under the title of "Disguised Profit Distribution by Way of Transfer Pricing". "The General Communiqué on Disguised Profit Distribution by Way of Transfer Pricing" published at 18 November 2007, explains the application related issues on this topic.
According to this communiqué, if the taxpayers conduct transactions like purchase and sale of goods or services with the related parties where the prices are not determined according to the arm's length principle, then it will be concluded that there is a disguised profit distribution by way of transfer pricing. Such disguised profit distributions will not be deducted from the corporate tax base for tax purposes.
As stated in the "7.1 Annual Documentation" section of this communiqué, the taxpayers are required to fill out the "Transfer Pricing, Controlled Foreign Entities and Thin Capitalization" form for the purchase and sale of goods or services conducted with their related parties in a taxation period, attach these forms to their corporate tax returns and submit to the tax offices.
3.19 Funds borrowed
The Bank, whenever required, generates funds from domestic and foreign sources in the form of borrowings, syndications, securitizations, and bill and bond issuances in the local and international markets.The funds borrowed are recorded at their purchase costs and valued at amortised costs using the effective interest method.
In cases where such funds are valued at their amortised costs and such application results in measurement or accounting inconsistencies due to having the relevant financial instruments valued using different methods or the related gains or losses are recorded differently, such fundings are valued and recorded at their fair values as per TAS 39 in order to minimise or prevent such inconsistencies.
3.20 Share issuances
None.
3.21 Confirmed bills of exchange and acceptances
Confirmed bills of exchange and acceptances are realized simultaneously with the customer payments and recorded in off-balance sheet accounts as possible debt and commitment, if any.
3.22 Government incentives
As of 31 December 2016, the Bank does not have any government incentives or grants.
3.23 Segment reporting
The Bank operates in corporate, commercial, retail and investment banking. Accordingly, the banking products served to customers are; custody services, time and demand deposits, accumulating deposit accounts, repos, overdraft facilities, spot loans, foreign currency indexed loans, consumer loans, automobile and housing loans, working capital loans, discounted bills, gold loans, foreign currency loans, Eximbank loans, pre-export loans, ECA covered financing, letters of guarantee, letters of credit, export factoring, acceptance credits, draft facilities, forfaiting, leasing, insurance, forward, futures, salary payments, investment account (ELMA), cheques, safety boxes, bill payments, tax collections, payment orders. GarantiCard, BonusCard, Miles&Smiles Card, FlexiCard, MoneyCard, BusinessCard under the brand names of Visa and Mastercard, virtual cards and also American Express credit cards and "Paracard" debit cards with Maestro, Electron, Visa and Mastercard brand names, are available.
The Bank provides service packages to its corporate, commercial and retail customers including deposit, loans, foreign trade transactions, investment products, cash management, leasing, factoring, insurance, credit cards, and other banking products. A customer-oriented branch network has been built in order to serve customers' needs effectively and efficiently. The Bank also utilizes alternative delivery channels intensively.
The Bank provides corporate banking products to international and national holdings in Turkey by coordinating regional offices, suppliers and intermediaries, utilizing cross-selling techniques. Mainly, it provides services through its commercial and mixed type of branches to export-revenue earning sectors like tourism and textile and exporters of Turkey's traditional agricultural products.
Additionally, the Bank provides banking services to enterprises and their employees working in retail and service sectors through product packages including overdraft accounts, POS machines, credit cards, cheque books, Turkish Lira and foreign currency deposits, investment accounts, internet banking and call-center, debit cards and bill payment modules.
Retail banking customers form a wide-spread and sustainable deposit base for the Bank. Individual customers' needs are met by diversified consumer banking products through branches and alternative delivery channels.
Information on the business segments is as follows:
Current Period | Retail Banking | Corporate / Commercial Banking | Invesment Banking | Other | Total Operations |
Total Operating Profit | 6,394,734 | 4,936,333 | 1,050,130 | 2,440,469 | 14,821,666 |
Other | - | - | - | - | - |
Total Operating Profit | 6,394,734 | 4,936,333 | 1,050,130 | 2,440,469 | 14,821,666 |
Net Operating Profit | 2,752,763 | 1,731,805 | 711,270 | 1,090,698 | 6,286,536 |
Income from Associates and Affiliates | - | - | - | 6,902 | 6,902 |
Net Operating Profit | 2,752,763 | 1,731,805 | 711,270 | 1,097,600 | 6,293,438 |
Provision for Taxes | - | - | - | 1,222,889 | 1,222,889 |
Net Profit | 2,752,763 | 1,731,805 | 711,270 | (125,289) | 5,070,549 |
| | | | | |
Segment Assets | 59,084,680 | 126,963,548 | 81,188,982 | 11,707,628 | 278,944,838 |
Investments in Associates and Affiliates | - | - | - | 5,210,562 | 5,210,562 |
Total Assets | 59,084,680 | 126,963,548 | 81,188,982 | 16,918,190 | 284,155,400 |
Segment Liabilities | 106,985,273 | 61,415,792 | 74,568,141 | 5,647,114 | 248,616,320 |
Shareholders' Equity | - | - | - | 35,539,080 | 35,539,080 |
Total Liabilities and Shareholders' Equity | 106,985,273 | 61,415,792 | 74,568,141 | 41,186,194 | 284,155,400 |
Prior Period | Retail Banking | Corporate / Commercial Banking | Invesment Banking | Other | Total Operations |
Total Operating Profit | 4,858,538 | 4,049,262 | 1,337,625 | 1,759,530 | 12,004,955 |
Other | - | - | - | - | - |
Total Operating Profit | 4,858,538 | 4,049,262 | 1,337,625 | 1,759,530 | 12,004,955 |
Net Operating Profit | (158,709) | 1,900,294 | 1,007,811 | 1,554,379 | 4,303,775 |
Income from Associates and Affiliates | - | - | - | 5,102 | 5,102 |
Net Operating Profit | (158,709) | 1,900,294 | 1,007,811 | 1,559,481 | 4,308,877 |
Provision for Taxes | - | - | - | 902,370 | 902,370 |
Net Profit | (158,709) | 1,900,294 | 1,007,811 | 657,111 | 3,406,507 |
| | | | | |
Segment Assets | 53,086,559 | 106,251,482 | 79,563,977 | 10,957,371 | 249,859,389 |
Investments in Associates and Affiliates | - | - | - | 4,483,197 | 4,483,197 |
Total Assets | 53,086,559 | 106,251,482 | 79,563,977 | 15,440,568 | 254,342,586 |
Segment Liabilities | 91,670,983 | 53,507,379 | 71,649,459 | 6,533,710 | 223,361,531 |
Shareholders' Equity | - | - | - | 30,981,055 | 30,981,055 |
Total Liabilities and Shareholders' Equity | 91,670,983 | 53,507,379 | 71,649,459 | 37,514,765 | 254,342,586 |
3.24 Other disclosures
None.
4 Financial Position and Results of Operations and Risk Management
4.1 Total capital
The capital items calculated as per the "Regulation on Equities of Banks" published on 5 September 2013, are presented below:
4.1.1 Components of total capital
| Amount | Amount as per the regulation before 1/1/2014 (*) |
COMMON EQUITY TIER I CAPITAL | | |
Paid-in Capital to be Entitled for Compensation after All Creditors | 4,972,554 | |
Share Premium | 11,880 | |
Reserves | 23,385,730 | |
Other Comprehensive Income according to TAS | 2,759,735 | |
Profit | 5,070,549 | |
Current Period Profit | 5,070,549 | |
Prior Period Profit | - | |
Bonus Shares from Associates, Affiliates and Joint-Ventures not Accounted in Current Period's Profit | 1,891 | |
Common Equity Tier I Capital Before Deductions | 36,202,339 | |
Deductions From Common Equity Tier I Capital | | |
Valuation adjustments calculated as per the article 9. (i) of the Regulation on Bank Capital | - | - |
Current and Prior Periods' Losses not Covered by Reserves, and Losses Accounted under Equity according to TAS (-) | 732,893 | - |
Leasehold Improvements on Operational Leases (-) | 103,037 | - |
Goodwill Netted with Deferred Tax Liabilities | - | - |
Other Intangible Assets Netted with Deferred Tax Liabilities Except Mortgage Servicing Rights | 128,006 | 213,344 |
Net Deferred Tax Asset/Liability (-) | - | - |
Differences arise when assets and liabilities not held at fair value, are subjected to cash flow hedge accounting | - | - |
Total credit losses that exceed total expected loss calculated according to the Regulation on Calculation of Credit Risk by Internal Ratings Based Approach | - | - |
Securitization gains | - | - |
Unrealized gains and losses from changes in bank's liabilities' fair values due to changes in creditworthiness | - | - |
Net amount of defined benefit plans | - | - |
Direct and Indirect Investments of the Bank on its own Tier I Capital (-) | 1,730 | - |
Shares Obtained against Article 56, Paragraph 4 of the Banking Law (-) | - | - |
Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions where the Bank Owns 10% or less of the Issued Share Capital Exceeding the 10% Threshold of above Tier I Capital (-) | - | - |
Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions where the Bank Owns 10% or more of the Issued Share Capital Exceeding the 10% Threshold of above Tier I Capital (-) | - | - |
Mortgage Servicing Rights Exceeding the 10% Threshold of Tier I Capital (-) | - | - |
Net Deferred Tax Assets arising from Temporary Differences Exceeding the10% Threshold of Tier I Capital (-) | - | - |
Amount Exceeding the 15% Threshold of Tier I Capital as per the Article 2, Clause 2 of the Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks (-) | - | - |
The Portion of Net Long Position of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions where the Bank Owns 10% or more of the Issued Share Capital not deducted from Tier I Capital (-) | - | - |
Mortgage Servicing Rights not deducted (-) | - | - |
Excess Amount arising from Deferred Tax Assets from Temporary Differences (-) | - | - |
Other items to be Defined by the BRSA (-) | - | - |
Deductions from Tier I Capital in cases where there are no adequate Additional Tier I or Tier II Capitals (-) | - | |
| Amount | Amount as per the regulation before 1/1/2014 (*) |
Total Deductions from Common Equity Tier I Capital | 965,666 | |
Total Common Equity Tier I Capital | 35,236,673 | |
ADDITIONAL TIER I CAPITAL | | |
Preferred Stock not Included in Common Equity Tier I Capital and the Related Share Premiums | - | |
Debt Instruments and the Related Issuance Premiums Defined by the BRSA | - | |
Debt Instruments and the Related Issuance Premiums Defined by the BRSA (Covered by Temporary Article 4) | - | |
Additional Tier I Capital before Deductions | - | |
Deductions from Additional Tier I Capital | | |
Direct and Indirect Investments of the Bank on its own Additional Tier I Capital (-) | - | - |
Investments in Equity Instruments Issued by Banks or Financial Institutions Invested in Bank's Additional Tier I Capital and Having Conditions Stated in the Article 7 of the Regulation | - | - |
Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions where the Bank Owns 10% or less of the Issued Share Capital Exceeding the 10% Threshold of above Tier I Capital (-) | - | - |
The Total of Net Long Position of the Direct or Indirect Investments in Additional Tier I Capital of Unconsolidated Banks and Financial Institutions where the Bank Owns more than 10% of the Issued Share Capital (-) | - | - |
Other items to be defined by the BRSA (-) | - | |
Items to be Deducted from Tier I Capital during the Transition Period | - | |
Goodwill and Other Intangible Assets and Related Deferred Taxes not deducted from Tier I Capital as per the Temporary Article 2, Clause 1 of the Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks (-) | 85,338 | - |
Net Deferred Tax Asset/Liability not deducted from Tier I Capital as per the Temporary Article 2, Clause 1 of the Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks (-) | - | - |
Deduction from Additional Tier I Capital when there is not enough Tier II Capital (-) | - | - |
Total Deductions from Additional Tier I Capital | - | |
Total Additional Tier I Capital | - | |
Total Tier I Capital (Tier I Capital= Common Equity Tier I Capital + Additional Tier I Capital) | 35,151,335 | |
TIER II CAPITAL | | |
Debt Instruments and the Related Issuance Premiums Defined by the BRSA | - | |
Debt Instruments and the Related Issuance Premiums Defined by the BRSA (Covered by Temporary Article 4) | - | |
Provisions (Amounts explained in the first paragraph of the article 8 of the Regulation on Bank Capital) | 2,596,082 | |
Total Deductions from Tier II Capital | 2,596,082 | |
Deductions from Tier II Capital | | |
Direct and Indirect Investments of the Bank on its own Tier II Capital (-) | - | - |
Investments in Equity Instruments Issued by Banks and Financial Institutions Invested in Bank's Tier II Capital and Having Conditions Stated in the Article 8 of the Regulation | - | - |
Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions where the Bank Owns 10% or less of the Issued Share Capital Exceeding the 10% Threshold of above Tier I Capital (-) | - | - |
Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions where the Bank Owns 10% or more of the Issued Share Capital Exceeding the 10% Threshold of above Tier I Capital (-) | - | |
The Total of Net Long Position of the Direct or Indirect Investments in Additional Tier I Capital and Tier II Capital of Unconsolidated Banks and Financial Institutions where the Bank Owns 10% or more of the Issued Share Capital Exceeding the 10% Threshold of Tier I Capital (-) | - | - |
Other items to be defined by the BRSA (-) | - | - |
Total Deductions from Tier II Capital | - | |
Total Tier II Capital | 2,596,082 | |
Total Equity (Total Tier I and Tier II Capital) | 37,747,417 | |
Total Tier I Capital and Tier II Capital ( Total Equity) | | |
| Amount | Amount as per the regulation before 1/1/2014 (*) |
Loans Granted against the Articles 50 and 51 of the Banking Law (-) | 31 | |
Net Book Values of Movables and Immovables Exceeding the Limit Defined in the Article 57, Clause 1 of the Banking Law and the Assets Acquired against Overdue Receivables and Held for Sale but Retained more than Five Years (-) | 55,860 | |
Other items to be Defined by the BRSA (-) | 36,994 | |
Items to be Deducted from the Sum of Tier I and Tier II Capital (Capital) During the Transition Period | | |
The Portion of Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions where the Bank Owns 10% or less of the Issued Share Capital Exceeding the 10% Threshold of above Tier I Capital not deducted from Tier I Capital, Additional Tier I Capital or Tier II Capital as per the Temporary Article 2, Clause 1 of the Regulation (-) | - | - |
The Portion of Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions where the Bank Owns more than 10% of the Issued Share Capital Exceeding the 10% Threshold of above Tier I Capital not deducted from Additional Tier I Capital or Tier II Capital as per the Temporary Article 2, Clause 1 of the Regulation (-) | - | - |
The Portion of Net Long Position of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions where the Bank Owns 10% or more of the Issued Share Capital, of the Net Deferred Tax Assets arising from Temporary Differences and of the Mortgage Servicing Rights not deducted from Tier I Capital as per the Temporary Article 2, Clause 2, Paragraph (1) and (2) and Temporary Article 2, Clause 1 of the Regulation (-) | - | - |
CAPITAL | | |
Total Capital ( Total of Tier I Capital and Tier II Capital ) | 37,654,532 | - |
Total Risk Weighted Assets | 232,322,344 | - |
CAPITAL ADEQUACY RATIOS | | |
CET1 Capital Ratio (%) | 15.17 | - |
Tier I Capital Ratio (%) | 15.13 | - |
Capital Adequacy Ratio (%) | 16.21 | - |
BUFFERS | | |
Bank-specific total CET1 Capital Ratio | 4.50 | - |
Capital Conservation Buffer Ratio (%) | 0.625 | - |
Bank-specific Counter-Cyclical Capital Buffer Ratio (%) | 0.01 | - |
Additional CET1 Capital Over Total Risk Weighted Assets Ratio Calculated According to the Article 4 of Capital Conservation and Counter-Cyclical Capital Buffers Regulation | 8.21 | - |
Amounts Lower Than Excesses as per Deduction Rules | | |
Remaining Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions where the Bank Owns 10% or less of the Issued Share Capital | - | - |
Remaining Total of Net Long Positions of the Investments in Tier I Capital of Unconsolidated Banks and Financial Institutions where the Bank Owns more than 10% or less of the Issued Share Capital | - | - |
Remaining Mortgage Servicing Rights | - | - |
Net Deferred Tax Assets arising from Temporary Differences | 153,379 | - |
Limits for Provisions Used in Tier II Capital Calculation | | |
General Loan Provisions for Exposures in Standard Approach (before limit of one hundred and twenty five per ten thousand) | 3,171,163 | - |
General Loan Provisions for Exposures in Standard Approach Limited by 1.25% of Risk Weighted Assets | 2,596,082 | - |
Total Loan Provision that Exceeds Total Expected Loss Calculated According to Communiqu on Calculation of Credit Risk by Internal Ratings Based Approach | - | - |
Total Loan Provision that Exceeds Total Expected Loss Calculated According to Communiqu on Calculation of Credit Risk by Internal Ratings Based Approach, Limited by 0.6% Risk Weighted Assets | - | - |
Debt Instruments Covered by Temporary Article 4 (effective between 1.1.2018-1.1.2022) | | |
Upper Limit for Additional Tier I Capital Items subject to Temporary Article 4 | - | - |
Amount of Additional Tier I Capital Items Subject to Temporary Article 4 that Exceeds Upper Limit | - | - |
Upper Limit for Additional Tier II Capital Items subject to Temporary Article 4 | - | - |
Amount of Additional Tier II Capital Items Subject to Temporary Article 4 that Exceeds Upper Limit | - | - |
(*) Under this item fully loaded amounts were reported for items that are subject to phasing in according to "Bank Capital Regulation" dated 1 January 2014.
The Bank plans its Common Equity Tier 1 (CET1) Capital by considering 10% as the minimum target while considering its additional CET 1 requirements during the phase-in period due to aforementioned regulations.
4.1.2 Items included in capital calculation
None.
4.1.3 Reconciliation of capital items to balance sheet
Current Period | Carrying value | Amount of correction | Value of the capital report | Explanation of differences |
Paid-in Capital | 4,200,000 | 772,554 | 4,972,554 | Inflation adjustments included in Paid-in Capital according to Regulation's Temporary Article 1 |
Capital Reserves | 2,882,801 | (842,188) | 2,040,613 | |
Other Comprehensive Income According to TAS | 2,869,030 | (842,188) | 2,026,842 | |
Securities Value Increase Fund | 622,143 | - | 622,143 | |
Revaluation Surplus on Tangible Assets | 1,626,437 | - | 1,626,437 | |
Revaluation Surplus on Intangible Assets | - | - | - | |
Revaluation Surplus on Investment Property | - | - | - | |
Hedging Reserves (Effective Portion) | (48,486) | (69,634) | (118,120) | Items not included in the calculation as per Regulation's Article 9-1-f |
Revaluation Surplus on Assets Held for Sale and Assets of Discontinued Operations | - | - | - | |
Other Capital Reserves | 668,936 | (772,554) | (103,618) | Inflation adjustments included in Paid-in Capital according to Regulation's Temporary Article 1 |
Bonus Shares of Associates, Affiliates and Joint-Ventures | 1,891 | - | 1,891 | |
Share Premium | 11,880 | - | 11,880 | |
Profit Reserves | 23,385,730 | - | 23,385,730 | |
Profit or Loss | 5,070,549 | - | 5,070,549 | |
Prior Periods Profit/Loss | - | - | - | |
Current Period Net Profit/Loss | 5,070,549 | - | 5,070,549 | |
Deductions from Common Equity Tier I Capital (-) | - | | 232,773 | Deductions from Common Equity Tier 1 Capital as per the Regulation |
Common Equity Tier I Capital | 35,539,080 | | 35,236,673 | |
Subordinated Debts | | | - | |
Deductions from Tier I Capital (-) | | | 85,338 | Deductions from Tier 1 Capital as per the Regulation |
Tier I Capital | | | 35,151,335 | |
Subordinated Debts | | | - | |
General Provisions | | | 2,596,082 | General Loan Provision added to Tier II Capital as per the Regulation's Article 8 |
Deductions from Tier II Capital (-) | | | - | Deductions from Tier II Capital as per the Regulation |
Tier II Capital | | | 2,596,082 | |
Deductions from Total Capital (-) | | | 92,885 | Deductions from Capital as per the Regulation |
Total | | | 37,654,532 | |
4.2 Credit risk
Credit risk is defined as 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. In compliance with the legislation, the credit limits are set for the financial position and credit requirements of customers within the authorization limits assigned for Branches, Lending Departments, Executive Vice President responsible of Lending, General Manager, Credit Committee and Board of Directors. The limits are subject to revision if necessary.
The debtors or group of debtors are subject to credit risk limits. Sectoral risk concentrations are reviewed on a monthly basis.
Credit worthiness of debtors is reviewed periodically in compliance with the legislation by the internal risk rating models. The credit limits are revised and further collateral is required if the risk level of debtor deteriorates. For unsecured loans, the necessary documentation is gathered in compliance with the legislation.
Geographical concentration of credit customers is reviewed monthly. This is in line with the concentration of industrial and commercial activities in Turkey.
In accordance with the Bank's lending policies, the debtor's creditworthiness is analysed and the adequate collateral is obtained based on the financial position of the company and the type of loan; like cash collateral, bank guarantees, mortgages, pledges, bills and corporate guarantees.
The Bank has control limits on the position held through forwards, options and other similar agreements. Credit risk of such instruments is managed together with the risk from market fluctuations. The Bank follows up the risk arising from such instruments and takes the necessary actions to decrease it when necessary.
The liquidated non-cash loans are subject to the same risk weight with the overdue loans.
The Bank performs foreign trade finance and other interbank credit transactions through widespread correspondents network. Accordingly, the Bank assigns limits to domestic and foreign banks and other financial institutions based on review of their credit worthiness, periodically.
The Bank's largest 100 and 200 cash loan customers compose 25.48% (31 December 2015: 24.93%) and 32.15% (31 December 2015: 31.56%) of the total cash loan portfolio, respectively.
The Bank's largest 100 and 200 non-cash loan customers compose 52.48% (31 December 2015: 54.96%) and 61.81% (31 December 2015: 63.60%) of the total non-cash loan portfolio, respectively.
The Bank's largest 100 ve 200 cash and non-cash loan customers represent 9.26% (31 December 2015: 9.26%) and 11.84% (31 December 2015: 11.78%) of the total "on and off balance sheet" assets, respectively.
The general provision for credit risks amounts to TL 3,171,163 thousands (31 December 2015: TL 3,002,057 thousands).
The Bank developed a statistical-based internal risk rating model for its credit portfolio of corporate/ commercial/medium-size companies. This internal risk rating model has been in use for customer credibility assessment since 2003. Risk rating has become a requirement for loan applications, and ratings are used both to determine branch managers' credit authorization limits and in credit assessment process.
The concentration table of the cash and non-cash loans for the Bank according to the risk rating system for its customers defined as corporate, commercial and medium-size enterprises is presented below:
| Current Period | Prior Period |
% | % | |
Above Avarage | 40.20 | 39.60 |
Average | 47.99 | 50.04 |
Below Average | 11.81 | 10.36 |
Total | 100.00 | 100.00 |
Total amount of exposures after offsetting transactions but before applying credit risk mitigations and the average exposure amounts that are classified in different risk groups and types, are disclosed below for the relevant period:
Exposure Categories | Current Period | Prior Period | ||
Risk Amount (*) | Average Risk Amount(**) | Risk Amount (*) | Average Risk Amount(**) | |
Conditional and unconditional exposures to central governments or central banks | 63,012,273 | 70,027,891 | 65,579,586 | 58,311,686 |
Conditional and unconditional exposures to regional governments or local authorities | 119,677 | 75,353 | 57,405 | 61,395 |
Conditional and unconditional exposures to administrative bodies and non-commercial undertakings | 48,854 | 47,360 | 54,708 | 48,936 |
Conditional and unconditional exposures to multilateral development banks | 1,443,371 | 1,136,416 | 1,092,922 | 135,683 |
Conditional and unconditional exposures to international organisations | - | - | - | - |
Conditional and unconditional exposures to banks and brokerage houses | 42,679,125 | 37,815,617 | 41,174,380 | 24,981,902 |
Conditional and unconditional exposures to corporates | 116,602,947 | 113,385,121 | 106,347,841 | 89,799,499 |
Conditional and unconditional retail exposures | 62,984,633 | 56,101,792 | 44,312,464 | 42,012,670 |
Conditional and unconditional exposures secured by real estate property | 35,952,134 | 30,167,033 | 27,318,928 | 24,460,455 |
Past due items | 705,142 | 632,390 | 560,568 | 470,914 |
Items in regulatory high-risk categories | 512,758 | 3,354,838 | 16,531,744 | 16,488,374 |
Exposures in the form of bonds secured by mortgages | - | - | - | - |
Securitisation positions | - | - | - | - |
Short term exposures to banks, brokerage houses and corporates | - | - | - | - |
Exposures in the form of collective investment undertakings | - | - | - | - |
Shares (***) | 5,266,254 | 4,192,217 | - | - |
Other items | 9,044,068 | 8,998,966 | 12,509,263 | 9,528,579 |
(*) Includes total risk amounts before the effect of credit risk mitigation but after credit conversions.
(**) Average risk amounts are the arithmetical average of the amounts in monthly reports prepared as per the Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks.
(***) Shares are reported under "Other Items" in the prior period.
4.2.1 Profile of significant exposures in major regions
Current Period (***) | Conditional and unconditional exposures to central governments or central banks | Conditional and unconditional exposures to banks and brokerage houses | Conditional and unconditional exposures to corporates | Conditional and unconditional retail exposures | Conditional and unconditional exposures secured by real estate property | Items in regulatory high-risk categories | Other | Total |
| ||||||||
Domestic | 61,853,834 | 11,052,564 | 107,275,365 | 62,571,431 | 35,868,863 | 495,276 | 10,111,602 | 289,228,935 |
European Union (EU) Countries | 672,569 | 28,379,177 | 1,969,165 | 30,689 | 53,051 | 14,096 | 1,443,441 | 32,562,189 |
OECD Countries (*) | 95 | 544,225 | 2,945,951 | 2,669 | 5,675 | 17 | 1 | 3,498,632 |
Off-Shore Banking Regions | - | 3,051 | 305,653 | 1,290 | 580 | - | 1 | 310,574 |
USA, Canada | 1,131 | 709,376 | 1,788,553 | 3,815 | 3,165 | - | - | 2,506,040 |
Other Countries | 484,644 | 251,168 | 1,151,653 | 374,739 | 20,800 | 3,369 | 2,693 | 2,289,067 |
Associates, Subsidiaries and Joint -Ventures | - | 1,739,564 | 1,166,607 | - | - | - | 5,069,628 | 7,975,799 |
Unallocated Assets/Liabilities (**) | - | - | - | - | - | - | - | - |
Total | 63,012,273 | 42,679,125 | 116,602,947 | 62,984,633 | 35,952,134 | 512,758 | 16,627,366 | 338,371,236 |
Prior Period (***) | Conditional and unconditional exposures to central governments or central banks | Conditional and unconditional exposures to banks and brokerage houses | Conditional and unconditional exposures to corporates | Conditional and unconditional retail exposures | Conditional and unconditional exposures secured by real estate property | Items in regulatory high-risk categories | Other | Total |
| ||||||||
Domestic | 64,580,953 | 12,975,347 | 98,429,954 | 44,071,401 | 27,272,448 | 16,399,492 | 8,555,272 | 272,284,867 |
European Union (EU) Countries | 670,260 | 24,923,003 | 1,835,187 | 38,115 | 32,475 | 6,393 | 1,093,054 | 28,598,487 |
OECD Countries (*) | 45 | 258,180 | 2,111,583 | 4,496 | 3,301 | 361 | - | 2,377,966 |
Off-Shore Banking Regions | - | 2,483 | 20 | 1,544 | - | - | - | 4,047 |
USA, Canada | 726 | 1,370,753 | 1,717,831 | 2,495 | 1,459 | 7 | 1 | 3,093,272 |
Other Countries | 327,602 | 1,007,008 | 1,007,674 | 194,413 | 9,245 | 125,491 | 284,276 | 2,955,709 |
Associates, Subsidiaries and Joint -Ventures | - | 637,606 | 1,245,592 | - | - | - | 4,342,263 | 6,225,461 |
Unallocated Assets/Liabilities (**) | - | - | - | - | - | - | - | - |
Total | 65,579,586 | 41,174,380 | 106,347,841 | 44,312,464 | 27,318,928 | 16,531,744 | 14,274,866 | 315,539,809 |
(*) Includes OECD countries other than EU countries, USA and Canada.
(**) Includes assets and liabilitiy items that can not be allocated on a consistent basis.
(***) Includes risk amounts before the effect of credit risk mitigation but after the credit conversions.
4.2.2 Risk profile by sectors or counterparties
Current Period (*) | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | TL | FC | Total |
Agriculture | - | - | - | - | - | - | 435,612 | 543,159 | 432,799 | 12,950 | 4,298 | - | - | - | - | - | 1,151,167 | 277,651 | 1,428,818 |
Farming and Stockbreeding | - | - | - | - | - | - | 285,797 | 502,588 | 395,558 | 12,546 | 4,055 | - | - | - | - | - | 1,079,632 | 120,912 | 1,200,544 |
Forestry | - | - | - | - | - | - | 81,028 | 19,013 | 28,632 | 404 | 120 | - | - | - | - | - | 32,248 | 96,949 | 129,197 |
Fishery | - | - | - | - | - | - | 68,787 | 21,558 | 8,609 | - | 123 | - | - | - | - | - | 39,287 | 59,790 | 99,077 |
Manufacturing | 5 | - | - | - | - | 128,678 | 49,376,204 | 5,886,803 | 7,153,576 | 173,086 | 106,603 | - | - | - | - | - | 19,773,085 | 43,051,870 | 62,824,955 |
Mining and Quarrying | - | - | - | - | - | - | 2,059,850 | 248,550 | 117,122 | 4,201 | 1,182 | - | - | - | - | - | 754,606 | 1,676,299 | 2,430,905 |
Production | - | - | - | - | - | - | 26,587,997 | 5,529,300 | 4,295,457 | 130,193 | 71,217 | - | - | - | - | - | 15,714,365 | 20,899,799 | 36,614,164 |
Electricity, Gas and Water | 5 | - | - | - | - | 128,678 | 20,728,357 | 108,953 | 2,740,997 | 38,692 | 34,204 | - | - | - | - | - | 3,304,114 | 20,475,772 | 23,779,886 |
Construction | - | - | 173 | - | - | - | 5,887,167 | 2,881,476 | 2,370,595 | 89,145 | 53,471 | - | - | - | - | - | 7,212,587 | 4,069,440 | 11,282,027 |
Services | 489 | - | 2,389 | 1,443,371 | - | 41,624,542 | 51,999,308 | 13,585,101 | 9,510,218 | 376,715 | 268,489 | - | - | - | 55,693 | - | 79,962,914 | 38,903,401 | 118,866,315 |
Wholesale and Retail Trade | - | - | 268 | - | - | - | 21,269,667 | 10,338,394 | 4,959,252 | 147,569 | 79,675 | - | - | - | - | - | 22,611,794 | 14,183,031 | 36,794,825 |
Accomodation and Dining | - | - | 13 | - | - | - | 2,962,373 | 774,569 | 2,689,619 | 80,017 | 6,117 | - | - | - | - | - | 1,753,450 | 4,759,258 | 6,512,708 |
Transportation and Telecom. | - | - | 10 | - | - | - | 12,551,212 | 1,675,775 | 602,465 | 139,447 | 14,648 | - | - | - | - | - | 3,059,554 | 11,924,003 | 14,983,557 |
Financial Institutions | - | - | - | 1,443,371 | - | 41,624,542 | 7,496,410 | 104,881 | 65,118 | 350 | 162,431 | - | - | - | 55,693 | - | 49,697,828 | 1,254,968 | 50,952,796 |
Real Estate and Rental Services | - | - | - | - | - | - | 4,932,407 | 198,883 | 621,903 | 5,087 | 631 | - | - | - | - | - | 1,307,888 | 4,451,023 | 5,758,911 |
Professional Services | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
Educational Services | 1 | - | 2,098 | - | - | - | 253,021 | 144,598 | 353,320 | 2,673 | 1,251 | - | - | - | - | - | 610,905 | 146,057 | 756,962 |
Health and Social Services | 488 | - | - | - | - | - | 2,534,218 | 348,001 | 218,541 | 1,572 | 3,736 | - | - | - | - | - | 921,495 | 2,185,061 | 3,106,556 |
Others | 63,011,779 | 119,677 | 46,292 | - | - | 925,905 | 8,904,656 | 40,088,094 | 16,484,946 | 53,245 | 79,897 | - | - | - | 5,210,561 | 9,044,069 | 72,851,435 | 71,117,686 | 143,969,121 |
Total | 63,012,273 | 119,677 | 48,854 | 1,443,371 | - | 42,679,125 | 116,602,947 | 62,984,633 | 35,952,134 | 705,141 | 512,758 | - | - | - | 5,266,254 | 9,044,069 | 180,951,188 | 157,420,048 | 338,371,236 |
1- Conditional and unconditional exposures to central governments or central banks
2- Conditional and unconditional exposures to regional governments or local authorities
3- Conditional and unconditional exposures to administrative bodies and non-commercial undertakings
4- Conditional and unconditional exposures to multilateral development banks
5- Conditional and unconditional exposures to international organisations
6- Conditional and unconditional exposures to banks and brokerage houses
7- Conditional and unconditional exposures to corporates
8- Conditional and unconditional retail exposures
9- Conditional and unconditional exposures secured by real estate property
10- Past due receivables
11- Receivables in regulatory high-risk categories
12- Exposures in the form of bonds secured by mortgages
13- Securitisation positions
14- Short term exposures to banks, brokerage houses and corporates
15- Shares
16- Other receivables
(*) Includes risk amounts before the effect of credit risk mitigation but after the credit conversions.
Prior Period (*) | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | TL | FC | Total |
Agriculture | - | - | - | - | - | - | 385,902 | 436,837 | 370,282 | 10,757 | 46,989 | - | - | - | - | | 1,053,624 | 197,143 | 1,250,767 |
Farming and Stockbreeding | - | - | - | - | - | - | 281,304 | 399,193 | 341,299 | 10,610 | 42,047 | - | - | - | - | | 972,695 | 101,758 | 1,074,453 |
Forestry | - | - | - | - | - | - | 20,912 | 19,800 | 17,528 | 67 | 693 | - | - | - | - | | 28,220 | 30,780 | 59,000 |
Fishery | - | - | - | - | - | - | 83,686 | 17,844 | 11,455 | 80 | 4,249 | - | - | - | - | | 52,709 | 64,605 | 117,314 |
Manufacturing | 5 | - | 4 | - | - | - | 45,736,627 | 3,971,473 | 3,734,935 | 179,773 | 254,156 | - | - | - | - | - | 15,180,415 | 38,696,558 | 53,876,973 |
Mining and Quarrying | - | - | - | - | - | - | 1,254,599 | 162,879 | 134,480 | 9,969 | 6,998 | - | - | - | - | - | 519,091 | 1,049,834 | 1,568,925 |
Production | - | - | 3 | - | - | - | 23,246,702 | 3,740,300 | 3,486,457 | 139,299 | 242,792 | - | - | - | - | - | 12,842,253 | 18,013,300 | 30,855,553 |
Electricity, Gas and Water | 5 | - | 1 | - | - | - | 21,235,326 | 68,294 | 113,998 | 30,505 | 4,366 | - | - | - | - | - | 1,819,071 | 19,633,424 | 21,452,495 |
Construction | - | - | 209 | - | - | - | 5,818,221 | 1,704,248 | 2,622,197 | 48,168 | 146,710 | - | - | - | - | - | 5,982,438 | 4,357,315 | 10,339,753 |
Services | 405 | - | 4,295 | 1,092,922 | - | 34,528,863 | 51,124,232 | 10,127,000 | 10,183,106 | 254,921 | 1,159,633 | - | - | - | - | 50,773 | 46,628,000 | 61,898,150 | 108,526,150 |
Wholesale and Retail Trade | 366 | - | 319 | - | - | - | 21,737,572 | 7,822,263 | 5,026,445 | 176,336 | 555,635 | - | - | - | - | - | 20,072,674 | 15,246,262 | 35,318,936 |
Accomodation and Dining | - | - | 298 | - | - | - | 3,183,450 | 506,444 | 2,239,133 | 40,623 | 55,509 | - | - | - | - | - | 1,748,152 | 4,277,305 | 6,025,457 |
Transportation and Telecom. | - | - | 4 | - | - | - | 8,408,153 | 1,273,987 | 833,456 | 25,281 | 91,904 | - | - | - | - | - | 2,807,608 | 7,825,177 | 10,632,785 |
Financial Institutions | - | - | - | 1,092,922 | - | 40,344,863 | 6,436,560 | 74,969 | 59,277 | 8,373 | 404,344 | - | - | - | - | 50,773 | 19,417,942 | 29,054,139 | 48,472,081 |
Real Estate and Rental Services | - | - | - | - | - | - | 3,720,599 | 128,215 | 1,532,275 | 932 | 12,206 | - | - | - | - | - | 1,127,657 | 4,266,570 | 5,394,227 |
Professional Services | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
Educational Services | 2 | - | 3,391 | - | - | - | 387,119 | 84,326 | 197,273 | 904 | 9,135 | - | - | - | - | - | 543,829 | 138,321 | 682,150 |
Health and Social Services | 37 | - | 283 | - | - | - | 1,434,779 | 236,796 | 295,247 | 2,472 | 30,900 | - | - | - | - | - | 910,138 | 1,090,376 | 2,000,514 |
Others | 65,579,176 | 57,405 | 50,200 | - | - | 829,517 | 9,098,859 | 28,072,906 | 10,408,408 | 66,949 | 14,924,256 | - | - | - | - | 12,458,490 | 101,670,310 | 39,875,856 | 141,546,166 |
Total | 65,579,586 | 57,405 | 54,708 | 1,092,922 | - | 41,174,380 | 106,347,841 | 44,312,464 | 27,318,928 | 560,568 | 16,531,744 | - | - | - | - | 12,509,263 | 170,514,787 | 145,025,022 | 315,539,809 |
1- Conditional and unconditional exposures to central governments or central banks
2- Conditional and unconditional exposures to regional governments or local authorities
3- Conditional and unconditional exposures to administrative bodies and non-commercial undertakings
4- Conditional and unconditional exposures to multilateral development banks
5- Conditional and unconditional exposures to international organisations
6- Conditional and unconditional exposures to banks and brokerage houses
7- Conditional and unconditional exposures to corporates
8- Conditional and unconditional retail exposures
9- Conditional and unconditional exposures secured by real estate property
10- Past due receivables
11- Receivables in regulatory high-risk categories
12- Exposures in the form of bonds secured by mortgages
13- Securitisation positions
14- Short term exposures to banks, brokerage houses and corporates
15- Shares
16- Other receivables
(*) Includes risk amounts before the effect of credit risk mitigation but after the credit conversions.
Current Period | Term To Maturity | ||||
Exposure Categories (*) | Up to 1 Month | 1-3 Months | 3-6 Months | 6-12 Months |
Over 1 Year |
Conditional and unconditional exposures to central governments or central banks | 6,877,124 | 14,069,704 | 87,825 | 5,445 | 36,605,758 |
Conditional and unconditional exposures to regional governments or local authorities | - | - | - | 1,881 | 117,796 |
Conditional and unconditional exposures to administrative bodies and non-commercial undertakings | 394 | 104 | 1,500 | 189 | 43,973 |
Conditional and unconditional exposures to multilateral development banks | - | - | - | 6,379 | 1,436,992 |
Conditional and unconditional exposures to international organisations | - | - | - | - | - |
Conditional and unconditional exposures to banks and brokerage houses | 13,675,680 | 2,254,641 | 1,364,836 | 2,306,504 | 22,483,788 |
Conditional and unconditional exposures to corporates | 6,445,897 | 8,331,269 | 10,638,293 | 16,181,977 | 69,832,703 |
Conditional and unconditional retail exposures | 13,507,480 | 7,465,096 | 2,334,488 | 4,820,056 | 28,830,747 |
Conditional and unconditional exposures secured by real estate property | 226,130 | 470,653 | 779,895 | 1,826,813 | 30,639,253 |
Past due items | - | - | - | - | - |
Items in regulatory high-risk categories | 1,244 | 162,801 | 2,350 | 3,446 | 42,770 |
Exposures in the form of bonds secured by mortgages | - | - | - | - | - |
Short term exposures to banks, brokerage houses and corporates | - | - | - | - | - |
Exposures in the form of collective investment undertakings | - | - | - | - | - |
Shares | - | - | - | - | - |
Other items | 646,707 | - | - | - | - |
Total | 41,380,656 | 32,754,268 | 15,209,187 | 25,152,690 | 190,033,780 |
(*) Includes risk amounts before the effect of credit risk mitigation but after the credit conversions.
Prior Period | Term To Maturity | ||||
Exposure Categories (*) | Up to 1 Month | 1-3 Months | 3-6 Months | 6-12 Months |
Over 1 Year |
Conditional and unconditional exposures to central governments or central banks | 6,612,762 | 20,527,333 | 223,550 | 3,497,122 | 31,977,550 |
Conditional and unconditional exposures to regional governments or local authorities | 2,000 | - | - | - | 55,405 |
Conditional and unconditional exposures to administrative bodies and non-commercial undertakings | 1,315 | 2,349 | 1,761 | 41,811 | 6,710 |
Conditional and unconditional exposures to multilateral development banks | - | - | - | - | 1,092,922 |
Conditional and unconditional exposures to international organisations | - | - | - | - | - |
Conditional and unconditional exposures to banks and brokerage houses | 14,212,426 | 2,207,557 | 3,046,810 | 2,798,437 | 18,893,862 |
Conditional and unconditional exposures to corporates | 7,415,455 | 7,084,795 | 9,918,170 | 19,117,403 | 61,800,148 |
Conditional and unconditional retail exposures | 10,716,218 | 4,049,414 | 6,122,293 | 3,984,908 | 13,340,904 |
Conditional and unconditional exposures secured by real estate property | 672,225 | 1,283,615 | 1,799,574 | 2,537,428 | 20,973,719 |
Past due items | - | - | - | - | - |
Items in regulatory high-risk categories | 2,033 | 466,630 | 1,496 | 1,008,013 | 14,841,673 |
Exposures in the form of bonds secured by mortgages | - | - | - | - | - |
Short term exposures to banks, brokerage houses and corporates | - | - | - | - | - |
Exposures in the form of collective investment undertakings | - | - | - | - | - |
Other items | - | - | - | - | - |
Total | 39,634,434 | 35,621,693 | 21,113,654 | 32,985,122 | 162,982,893 |
(*) Includes risk amounts before the effect of credit risk mitigation but after the credit conversions.
4.2.4 Exposure categories
An international rating firm, Fitch Ratings' external risk ratings are used to determine the risk weigths of the risk categories as per the Article 6 of the "Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks".
The international risk ratings are used for the exposures to central governments and central banks, whereas for central governments and central banks that are not rated by Fitch Ratings, the published country ratings as announced by the Organisation for Economic Cooperation and Development (OECD) are used.
According to the regulation on capital adequacy, external risk ratings are used only for the exposures to banks and brokerage houses and to corporates where the counterparties are resident in abroad, to determine their risk weights. Where the counterparties are domestic, the related exposures are included in the calculation of capital adequcy as unrated.
In the determination of risk weights for items that are not included in trading book; if a relevant rating is available then such rating, but if it is an unrated exposure then the rating available for the issuer is used.
Fitch Ratings' risk ratings as per the credit quality grades and the risk weights according to exposure categories are presented below:
Credit Quality Grade | Fitch Ratings Long Term Credit Rating | Exposure Categories | |||
Exposures to Central Governments or Central Banks | Exposures to Banks and Brokerage Houses | Exposures to Corporates | |||
Exposures with Original Maturities Less Than 3 Months | Exposures with Original Maturities More Than 3 Months | ||||
1 | AAA to AA- | 0% | 20% | 20% | 20% |
2 | A+ to A- | 20% | 20% | 50% | 50% |
3 | BBB+ to BBB- | 50% | 20% | 50% | 100% |
4 | BB+ to BB- | 100% | 50% | 100% | 100% |
5 | B+ to B- | 100% | 50% | 100% | 150% |
6 | CCC+ and below | 150% | 150% | 150% | 150% |
4.2.5 Exposures by risk weights
Current Period | 0% | 10% | 20% | 35% | 50% | 75% | 100% | 150% | 200% | 250% | Deductions from Equity |
Risk Weights | | | | | | | | | | | |
Exposures before Credit Risk Mitigation | 43,202,244 | - | 11,155,816 | 18,651,705 | 78,781,647 | 62,981,696 | 123,124,624 | 320,125 | - | 153,379 | 410,963 |
Exposures after Credit Risk Mitigation | 38,772,528 | - | 7,701,489 | 18,645,667 | 59,084,603 | 62,393,126 | 120,613,171 | 320,121 | - | 153,379 | 410,963 |
Prior Period | 0% | 10% | 20% | 50% | 75% | 100% | 150% | 200% | 250% | Deductions from Equity |
Risk Weights | ||||||||||
Exposures before Credit Risk Mitigation | 61,545,115 | - | 17,879,816 | 56,854,873 | 38,639,041 | 124,127,113 | 6,216,968 | 9,629,940 | 646,943 | 488,652 |
Exposures after Credit Risk Mitigation | 55,176,759 | - | 10,665,220 | 48,243,166 | 38,349,975 | 111,416,563 | 6,166,690 | 9,570,865 | 646,943 | 488,652 |
4.2.6 Information by major sectors and type of counterparties
As per the TAS and TFRS;
Impaired Credits; are the credits that either overdue more than 90 days as of the reporting date or are treated as impaired due to their creditworthiness. For such credits, "specific provisons" are allocated as per the Provisioning Regulation.
Past Due Credits; are the credits that overdue upto 90 days but not impaired. For such credits, "general provisions" are allocated as per the Provisioning Regulation.
Current Period | Credit Risks | |||
Impaired Credits | Past Due Credits | Value Adjustments | Provisions | |
Agriculture | 40,139 | 15,965 | 509 | 23,619 |
Farming and Stockbreeding | 36,921 | 13,265 | 475 | 21,313 |
Forestry | 2,077 | 1,002 | 14 | 1,352 |
Fishery | 1,141 | 1,698 | 20 | 954 |
Manufacturing | 658,603 | 246,348 | 16,311 | 428,556 |
Mining and Quarrying | 29,767 | 3,882 | 114 | 23,429 |
Production | 486,364 | 157,683 | 9,254 | 335,728 |
Electricity, Gas and Water | 142,472 | 84,783 | 6,943 | 69,399 |
Construction | 464,155 | 105,302 | 4,593 | 297,577 |
Services | 1,408,404 | 3,802,304 | 60,341 | 882,420 |
Wholesale and Retail Trade | 715,407 | 275,028 | 15,039 | 455,836 |
Accomodation and Dining | 137,599 | 58,333 | 3,417 | 47,625 |
Transportation and Telecommunication | 472,588 | 3,425,754 | 39,641 | 314,073 |
Financial Institutions | 19,101 | 1,326 | 43 | 18,588 |
Real Estate and Rental Services | 13,515 | 18,330 | 1,081 | 7,592 |
Professional Services | - | - | - | - |
Educational Services | 31,667 | 9,181 | 172 | 26,644 |
Health and Social Services | 18,527 | 14,352 | 948 | 12,062 |
Others | 3,057,335 | 4,008,042 | 93,102 | 2,769,484 |
Total | 5,628,636 | 8,177,961 | 174,856 | 4,401,656 |
Prior Period | Credit Risks | |||
Impaired Credits | Past Due Credits | Value Adjustments | Provisions | |
Agriculture | 36,937 | 14,220 | 336 | 15,628 |
Farming and Stockbreeding | 32,259 | 13,013 | 318 | 14,812 |
Forestry | 411 | 781 | 10 | 228 |
Fishery | 4,267 | 426 | 8 | 588 |
Manufacturing | 698,449 | 78,776 | 1,203 | 447,654 |
Mining and Quarrying | 32,811 | 3,348 | 43 | 18,935 |
Production | 515,468 | 73,712 | 1,126 | 310,241 |
Electricity, Gas and Water | 150,170 | 1,716 | 34 | 118,478 |
Construction | 246,831 | 76,734 | 1,213 | 116,875 |
Services | 1,165,642 | 332,927 | 7,036 | 683,758 |
Wholesale and Retail Trade | 761,034 | 167,377 | 2,418 | 412,423 |
Accomodation and Dining | 148,421 | 33,564 | 466 | 85,920 |
Transportation and Telecommunication | 203,392 | 111,408 | 3,963 | 156,491 |
Financial Institutions | 30,577 | 791 | 12 | 17,754 |
Real Estate and Rental Services | 3,471 | 3,616 | 35 | 1,972 |
Professional Services | - | - | - | - |
Educational Services | 5,653 | 1,961 | 40 | 3,690 |
Health and Social Services | 13,094 | 14,210 | 102 | 5,508 |
Others | 2,570,149 | 3,037,456 | 134,043 | 2,405,892 |
Total | 4,718,008 | 3,540,113 | 143,831 | 3,669,807 |
4.2.7 Movements in value adjustments and provisions
| Current Period | Opening Balance | Provision for Period | Provision Reversals | Other Adjustments(*) | Closing Balance |
1 | Specific Provisions | 3,669,807 | 2,822,117 | 2,090,268 | - | 4,401,656 |
2 | General Provisions | 3,002,057 | 161,626 | 64 | 7,544 | 3,171,163 |
| Prior Period | Opening Balance | Provision for Period | Provision Reversals | Other Adjustments(*) | Closing Balance |
1 | Specific Provisions | 2,782,842 | 1,951,849 | 1,064,884 | - | 3,669,807 |
2 | General Provisions | 2,434,629 | 562,604 | 510 | 5,334 | 3,002,057 |
(*) Includes foreign exchange differences, mergers, acquisitions and disposals of subsidiaries.
4.2.8 Exposures subject to countercyclical capital buffer
Country | RWAs of Banking Book for Private Sector Lending | RWAs of Trading Book | Total |
Turkey | 167,512,628 | 350,751 | 167,863,379 |
the Netherlands | 965,364 | - | 965,364 |
Malta | 800,187 | - | 800,187 |
NCTR | 568,033 | - | 568,033 |
Cayman Islands | 530,529 | - | 530,529 |
Switzerland | 522,731 | 73 | 522,804 |
USA | 155,705 | - | 155,705 |
Macedonian Republic | 109,574 | - | 109,574 |
Sweden | 75,583 | - | 75,583 |
Romania | 66,050 | - | 66,050 |
Other | 172,526 | - | 172,526 |
4.3 Currency risk
Foreign currency position limit is set in compliance with the legal standard ratio of net foreign currency position. As of 31 December 2016, the Bank's net 'on balance sheet' foreign currency short position amounts to TL 17,200,230 thousands (31 December 2015: TL 7,778,023 thousands), net 'off-balance sheet' foreign currency long position amounts to TL 18,461,666 thousands (31 December 2015: TL 9,467,068 thousands), while net foreign currency long open position amounts to TL 1,261,436 thousands (31 December 2015: TL 1,689,045 thousands).
The foreign currency position risk of the Bank is measured by "standard method" and "value-at-risk (VaR) model". Measurements by standard method are carried out monthly, whereas measurements by "VaR" are done daily. The foreign currency exchange risk is managed through transaction, dealer, desk and stop-loss limits approved by the board of directors for the trading portfolio beside the foreign currency net position standard ratio and the VaR limit.
The Bank's effective exchange rates at the date of balance sheet and for the last five working days of the period announced by the Bank in TL are as follows:
| USD | EUR |
Foreign currency purchase rates at balance sheet date | 3.5130 | 3.7020 |
Exchange rates for the days before balance sheet date; | | |
Day 1 | 3.5130 | 3.7020 |
Day 2 | 3.5250 | 3.6863 |
Day 3 | 3.5370 | 3.6776 |
Day 4 | 3.5170 | 3.6756 |
Day 5 | 3.5020 | 3.6610 |
Last 30-days arithmetical average rates | 3.4955 | 3.6814 |
The Bank's currency risk:
Current Period | EUR | USD | Other FCs | Total |
Assets | | | | |
Cash (Cash on Hand, Money in Transit, Purchased Cheques) and Balances with the Central Bank of Turkey | 5,164,997 | 10,577,018 | 1,319,416 | 17,061,431 |
Banks | 4,695,750 | 6,561,692 | 614,830 | 11,872,272 |
Financial Assets at Fair Value through Profit/Loss | 130,512 | 305,288 | 3 | 435,803 |
Interbank Money Market Placements | 351,691 | - | - | 351,691 |
Financial Assets Available-for-Sale | 72,795 | 1,342,492 | 1 | 1,415,288 |
Loans (*) | 28,543,720 | 44,473,359 | 700,722 | 73,717,801 |
Investments in Associates, Affiliates and Joint- Ventures | 2,747,797 | - | - | 2,747,797 |
Investments Held-to-Maturity | 129,789 | 11,371,272 | - | 11,501,061 |
Derivative Financial Assets Held for Risk Management | - | 65,495 | - | 65,495 |
Tangible Assets | 14 | 266 | - | 280 |
Intangible Assets | - | - | - | - |
Other Assets | 330,013 | 557,320 | 5,073 | 892,406 |
Total Assets | 42,167,078 | 75,254,202 | 2,640,045 | 120,061,325 |
| | | | |
Liabilities | | | | |
Bank Deposits | 1,566,570 | 1,196,588 | 192,104 | 2,955,262 |
Foreign Currency Deposits | 22,619,712 | 55,507,914 | 1,839,025 | 79,966,651 |
Interbank Money Market Takings | - | - | - | - |
Other Fundings | 9,385,338 | 28,776,969 | 2,399 | 38,164,706 |
Securities Issued | 2,192,240 | 8,736,764 | 738,652 | 11,667,656 |
Miscellaneous Payables | 56,132 | 835,181 | 5,380 | 896,693 |
Derivative Financial Liabilities Held for Risk Management | 19,224 | 69,112 | - | 88,336 |
Other Liabilities (**) | 383,664 | 1,101,357 | 2,037,230 | 3,522,251 |
Total Liabilities | 36,222,880 | 96,223,885 | 4,814,790 | 137,261,555 |
| | | | |
Net 'On Balance Sheet' Position | 5,944,198 | (20,969,683) | (2,174,745) | (17,200,230) |
Net 'Off-Balance Sheet' Position | (4,526,285) | 20,945,530 | 2,042,421 | 18,461,666 |
Derivative Assets | 14,374,090 | 58,983,474 | 4,395,536 | 77,753,100 |
Derivative Liabilities | 18,900,375 | 38,037,944 | 2,353,115 | 59,291,434 |
Non-Cash Loans | - | - | - | - |
| | | | |
Prior Period | | | | |
Total Assets | 32,703,430 | 76,415,779 | 5,438,306 | 114,557,515 |
Total Liabilities | 31,085,884 | 86,871,090 | 4,378,564 | 122,335,538 |
Net 'On Balance Sheet' Position | 1,617,546 | (10,455,311) | 1,059,742 | (7,778,023) |
Net 'Off-Balance Sheet' Position | (552,341) | 11,191,825 | (1,172,416) | 9,467,068 |
Derivative Assets | 11,681,920 | 43,870,033 | 6,336,208 | 61,888,161 |
Derivative Liabilities | 12,234,261 | 32,678,208 | 7,508,624 | 52,421,093 |
Non-Cash Loans | - | - | - | - |
(*) The foreign currency-indexed loans amounting TL 6,396,564 thousands included under TL loans in the accompanying balance sheet are presented above under the related foreign currency codes.
(**) Other liabilities include gold deposits of TL 2,024,532 thousands.
4.4 Interest rate risk
The interest rate risk resulting from balance sheet maturity mismatch presents the possible losses that may arise due to the changes in interest rates of interest sensitive assets and liabilities in the on- and off-balance sheet. Interest sensitivity of assets, liabilities and off-balance sheet items is evaluated during the Weekly Assesment Commitee and Assets-Liabilities Committee meetings taking into consideration the developments in market conditions.
The Bank's interest rate risk is measured by using economic value, economic capital, net interest income, income at risk, market price sensitivity of marketable securities portfolio, duration-gap and sensitivity analysis.
The results are supported by the sensitivity and scenario analysis performed periodically due to the possible instabilities in the markets. Furthermore, the interest rate risk is monitored according to the limits approved by the board of directors.
4.4.1 Interest rate sensitivity of assets, liabilities and off balance sheet items (based on repricing dates)
Current Period | Up to 1 Month | 1-3 Months | 3-12 Months | 1-5 Years | 5 Years and Over | Non-Interest Bearing (*) | Total |
Assets | | | | | | | |
Cash (Cash on Hand, Money in Transit, Purchased Cheques) and Balances with the Central Bank of Turkey | 17,892,432 | - | - | - | - | 5,892,702 | 23,785,134 |
Banks | 3,926,271 | 1,934,196 | 1,989,280 | - | - | 4,469,179 | 12,318,926 |
Financial Assets at Fair Value through Profit/Loss | 7,624 | 22,679 | 15,205 | 26,655 | 42,663 | 3,391,602 | 3,506,428 |
Interbank Money Market Placements | 351,690 | - | - | - | - | 1 | 351,691 |
Financial Assets Available-for-Sale | 2,613,361 | 5,750,771 | 5,630,419 | 2,729,802 | 1,684,778 | 1,503,438 | 19,912,569 |
Loans | 43,310,831 | 22,078,517 | 55,780,392 | 48,273,126 | 12,730,401 | 3,874,961 | 186,048,228 |
Investments Held-to-Maturity | 1,025,906 | 2,002,859 | 5,554,835 | 5,329,013 | 7,297,741 | 2,429,830 | 23,640,184 |
Other Assets | 3,886 | 176 | - | 16,494 | 2,306 | 14,569,378 | 14,592,240 |
Total Assets | 69,132,001 | 31,789,198 | 68,970,131 | 56,375,090 | 21,757,889 | 36,131,091 | 284,155,400 |
| | | | | | | |
Liabilities | | | | | | | |
Bank Deposits | 645,554 | 9,261 | 207,533 | - | - | 2,856,198 | 3,718,546 |
Other Deposits | 88,684,664 | 20,652,616 | 11,479,265 | 180,101 | - | 36,516,405 | 157,513,051 |
Interbank Money Market Takings | 9,763,295 | - | - | - | - | 6,092 | 9,769,387 |
Miscellaneous Payables | - | - | - | - | - | 9,088,139 | 9,088,139 |
Securities Issued | 506,828 | 1,335,786 | 4,599,655 | 7,523,662 | 2,143,691 | 327,257 | 16,436,879 |
Other Fundings | 13,807,571 | 14,873,592 | 6,853,254 | 4,343,480 | 164,288 | 244,183 | 40,286,368 |
Other Liabilities | 6,058 | 9,469 | 20,681 | 1,686 | - | 47,305,136 | 47,343,030 |
Total Liabilities | 113,413,970 | 36,880,724 | 23,160,388 | 12,048,929 | 2,307,979 | 96,343,410 | 284,155,400 |
| | | | | | | |
On Balance Sheet Long Position | - | - | 45,809,743 | 44,326,161 | 19,449,910 | - | 109,585,814 |
On Balance Sheet Short Position | (44,281,969) | (5,091,526) | - | - | - | (60,212,319) | (109,585,814) |
Off-Balance Sheet Long Position | 8,000,925 | 10,184,917 | 12,492,698 | 4,640,715 | 4,244,593 | - | 39,563,848 |
Off-Balance Sheet Short Position | (1,313,961) | (4,549,173) | (9,696,072) | (12,903,699) | (11,205,806) | - | (39,668,711) |
Total Position | (37,595,005) | 544,218 | 48,606,369 | 36,063,177 | 12,488,697 | (60,212,319) | (104,863) |
(*) Interest accruals are also included in non-interest bearing column.
Prior Period | Up to 1 Month | 1-3 Months | 3-12 Months | 1-5 Years | 5 Years and Over | Non-Interest Bearing (*) | Total |
Assets | | | | | | | |
Cash (Cash on Hand, Money in Transit, Purchased Cheques) and Balances with the Central Bank of Turkey | 237,533 | - | - | - | - | 24,913,990 | 25,151,523 |
Banks | 4,891,625 | 1,627,764 | 1,721,756 | - | - | 3,606,350 | 11,847,495 |
Financial Assets at Fair Value through Profit/Loss(**) | 6,123 | 43,980 | 24,243 | 64,552 | 27,070 | 1,484,381 | 1,650,349 |
Interbank Money Market Placements | 61,068 | - | - | - | - | 1 | 61,069 |
Financial Assets Available-for-Sale | 1,056,789 | 8,255,927 | 5,535,331 | 2,886,934 | 1,398,732 | 1,386,088 | 20,519,801 |
Loans (**) | 36,234,817 | 19,851,601 | 47,116,862 | 41,487,703 | 11,718,450 | 2,928,608 | 159,338,041 |
Investments Held-to-Maturity | 1,314,880 | 1,839,477 | 5,475,789 | 4,164,735 | 7,166,113 | 1,794,818 | 21,755,812 |
Other Assets | 8,141 | - | - | - | 3,126 | 14,007,229 | 14,018,496 |
Total Assets | 43,810,976 | 31,618,749 | 59,873,981 | 48,603,924 | 20,313,491 | 50,121,465 | 254,342,586 |
| | | | | | | |
Liabilities | | | | | | | |
Bank Deposits | 2,559,672 | 1,004,936 | 136,962 | - | - | 1,819,409 | 5,520,979 |
Other Deposits | 69,211,491 | 23,297,959 | 12,546,330 | 155,766 | - | 30,166,807 | 135,378,353 |
Interbank Money Market Takings | 12,530,501 | 242 | 2,520,164 | - | - | 17,254 | 15,068,161 |
Miscellaneous Payables | - | - | - | - | - | 8,336,852 | 8,336,852 |
Securities Issued | 1,065,962 | 1,063,971 | 1,884,600 | 6,724,385 | 3,155,359 | 304,492 | 14,198,769 |
Other Fundings | 13,072,799 | 12,976,046 | 2,387,108 | 4,813,288 | 154,377 | 193,971 | 33,597,589 |
Other Liabilities | 2,961 | 41,686 | 13,766 | 3,020 | - | 42,180,450 | 42,241,883 |
Total Liabilities | 98,443,386 | 38,384,840 | 19,488,930 | 11,696,459 | 3,309,736 | 83,019,235 | 254,342,586 |
| | | | | | | |
On Balance Sheet Long Position | - | - | 40,385,051 | 36,907,465 | 17,003,755 | - | 94,296,271 |
On Balance Sheet Short Position | (54,632,410) | (6,766,091) | - | - | - | (32,897,770) | (94,296,271) |
Off-Balance Sheet Long Position | 5,220,980 | 7,262,160 | 11,606,458 | 5,101,636 | 2,626,080 | - | 31,817,314 |
Off-Balance Sheet Short Position | (1,478,854) | (4,029,766) | (9,071,991) | (10,112,625) | (7,396,845) | - | (32,090,081) |
Total Position | (50,890,284) | (3,533,697) | 42,919,518 | 31,896,476 | 12,232,990 | (32,897,770) | (272,767) |
(*) Interest accruals are also included in non-interest bearing column.
(**) Loans amounting to TL 198,118 thousands included under "financial assets at fair value through profit or loss" in the accompanying balance sheet, are presented above under "Loans".
4.4.2 Average interest rates on monetary financial instruments
Current Period | EUR | USD | JPY | TL |
| % | % | % | % |
Assets | | | | |
Cash (Cash on Hand, Money in Transit, Purchased Cheques) and Balances with the Central Bank of Turkey | - | 0.52 | - | 4.22 |
Banks | 0.05 | 0.90 | - | 9.09 |
Financial Assets at Fair Value through Profit/Loss | 2.18 | 5.77 | - | 10.16 |
Interbank Money Market Placements | 0.05 | - | - | - |
Financial Assets Available-for-Sale | - | 5.64 | - | 10.08 |
Loans | 3.92 | 5.61 | 3.41 | 15.26 |
Investments Held-to-Maturity | 0.19 | 5.53 | - | 10.22 |
Liabilities | | | | |
Bank Deposits | 0.20 | 1.21 | - | 9.39 |
Other Deposits | 0.88 | 1.95 | 1.22 | 7.48 |
Interbank Money Market Takings | - | - | - | 8.30 |
Miscellaneous Payables | - | - | - | - |
Securities Issued | 3.48 | 5.13 | 0.64 | 10.34 |
Other Fundings | 0.95 | 2.60 | - | 10.26 |
Prior Period | EUR | USD | JPY | TL |
| % | % | % | % |
Assets | | | | |
Cash (Cash on Hand, Money in Transit, Purchased Cheques) and Balances with the Central Bank of Turkey | - | 0.35 | - | 2.90 |
Banks | 0.13 | 0.15 | - | 11.43 |
Financial Assets at Fair Value through Profit/Loss | 4.66 | 4.64 | - | 10.29 |
Interbank Money Market Placements | - | 0.55 | - | - |
Financial Assets Available-for-Sale | - | 5.67 | - | 10.54 |
Loans | 3.94 | 5.17 | 3.04 | 15.20 |
Investments Held-to-Maturity | 0.19 | 5.49 | - | 10.76 |
Liabilities | | | | |
Bank Deposits | 0.56 | 1.05 | - | 10.69 |
Other Deposits | 0.95 | 1.43 | 1.19 | 8.20 |
Interbank Money Market Takings | - | 2.12 | 1.49 | 9.31 |
Miscellaneous Payables | - | - | - | - |
Securities Issued | 3.42 | 4.83 | 1.01 | 9.94 |
Other Fundings | 1.09 | 2.17 | 1.50 | 11.06 |
4.5 Position risk of equity securities in banking book
4.5.1 Equity shares in associates and affiliates
Accounting policies for equity shares in associates and affiliates are disclosed in Note 3.3.
4.5.2 Comparison of carrying, fair and market values of equity shares
Current Period | Comparison | |||
Equity Securities (shares) | Carrying Value | Fair Value(*) | Market Value | |
1 | Investment in Shares- Grade A | 5,109,467 | 4,997,355 | 83,689 |
| Quoted Securities | 79,275 | 79,275 | 83,689 |
2 | Investment in Shares- Grade B | 99,371 | 72,273 | 82,466 |
| Quoted Securities | 72,273 | 72,273 | 82,466 |
3 | Investment in Shares- Grade C | 662 | - | - |
| Quoted Securities | - | - | - |
4 | Investment in Shares- Grade D | - | - | - |
| Quoted Securities | - | - | - |
5 | Investment in Shares- Grade E | 1,014 | - | - |
| Quoted Securities | - | - | - |
6 | Investment in Shares- Grade F | 48 | - | - |
| Quoted Securities | - | - | - |
(*) The balances are as per the results of equity accounting application.
Prior Period | Comparison | |||
Equity Securities (shares) | Carrying Value | Fair Value(*) | Market Value | |
1 | Investment in Shares- Grade A | 4,389,688 | 4,277,576 | 70,875 |
| Quoted Securities | 70,956 | 70,956 | 70,875 |
2 | Investment in Shares- Grade B | 91,785 | 64,688 | 69,839 |
| Quoted Securities | 64,688 | 64,688 | 69,839 |
3 | Investment in Shares- Grade C | 662 | - | - |
| Quoted Securities | - | - | - |
4 | Investment in Shares- Grade D | - | - | - |
| Quoted Securities | - | - | - |
5 | Investment in Shares- Grade E | 1,014 | - | - |
| Quoted Securities | - | - | - |
6 | Investment in Shares- Grade F | 48 | - | - |
| Quoted Securities | - | - | - |
(*) The balances are as per the results of equity accounting application.
4.5.3 Realised gains/losses, revaluation surpluses and unrealised gains/losses on equity securities and results included in core and supplementary capitals
Current Period | Gains/Losses in Current Period | Revaluation Surpluses | Unrealised Gains and Losses | ||||
Portfolio | Total | Amount in Tier I Capital(*) | Total | Amount in Core Capital | Amount in Tier I Capital(*) | ||
1 | Private Equity Investments | - | - | - | - | - | - |
2 | Quoted Shares | - | 66,295 | 66,295 | - | - | - |
3 | Other Shares | - | 2,915,577 | 2,915,577 | - | - | - |
| Total | - | 2,981,873 | 2,981,873 | - | - | - |
(*) The balances are as per the results of equity accounting application.
Prior Period | Gains/Losses in Current Period | Revaluation Surpluses | Unrealised Gains and Losses | ||||
Portfolio | Total | Amount in Tier I Capital | Total | Amount in Core Capital | Amount in Tier I Capital(*) | ||
1 | Private Equity Investments | - | - | - | - | - | - |
2 | Quoted Shares | - | 50,392 | 50,392 | - | - | - |
3 | Other Shares | - | 2,493,817 | 2,493,817 | - | - | - |
| Total | - | 2,544,209 | 2,544,209 | - | - | - |
(*) The balances are as per the results of equity accounting application.
4.5.4 Capital requirement as per equity shares
| Current Period | | ||
Portfolio | Carrying Value | RWA Total | Minimum Capital Requirement | |
1 | Private Equity Investments | - | - | - |
2 | Quoted Shares | 151,548 | 151,548 | 12,124 |
3 | Other Shares | 5,059,013 | 5,059,013 | 404,721 |
| Total | 5,210,561 | 5,210,561 | 416,845 |
| Prior Period | | ||
Portfolio | Carrying Value | RWA Total | Minimum Capital Requirement | |
1 | Private Equity Investments | - | - | - |
2 | Quoted Shares | 135,644 | 135,644 | 10,852 |
3 | Other Shares | 4,347,553 | 4,347,553 | 347,804 |
| Total | 4,483,197 | 4,483,197 | 358,656 |
4.6 Liquidity risk management and liquidity coverage ratio
Liquidity risk is managed by asset and liability management department (ALMD) and asset and liability committee (ALCO) in line with risk management policies and risk appetite approved by the board of directors in order to take the necessary measures in a timely and correct manner against possible liquidity shortages that may result from market conditions and balance sheet structure. Under stressed conditions, liquidity risk is managed within the contingency funding plan framework.
The board of directors reviews the liquidity risk management policy and approves the liquidity and funding risk policies, ensures the effective of practice of policies and integrations with the Bank's risk management system. The board of directors determines the basic metrics in liquidity risk measurement and monitoring. The board of directors establishes risk appetite of the Bank in liquidity risk management and identifies the risk limits in accordance with the risk appetite and reviews it regularly.
ALCO takes necessary decisions which will be executed by related departments by assessing the liquidity risk that the Bank is exposed to and considering the Bank's strategy and conditions of competition and pursues the implementations.
ALMD, performs daily liquidity management by ensuring compliance with regulatory and internal liquidity limits and monitoring related early warning indicators in case of probable liquidity squeezes. The medium and long term liquidity and funding management is performed by ALMD in accordance with ALCO decisions.
Risk management head defines the Bank's liquidity risk, measures and monitors the risks with liquidity risk measurement methods that are in compliance with international standards, presents measurement results periodically to related departments, committees and senior management. Risk management department coordinates related parties in order to ensure compliance of risk management process in accordance with the Bank's risk profile, operation environment and strategic plan with regulations. Risk management department analyses, develops and revises relevant liquidity risk measurement in accordance with changing market conditions and the Bank's structure. Risk management department reviews assumptions and parameters used in liquidity risk analysis.
The liquidity risk analysis and the important liquidity indicators are reported monthly to related senior management. Additionally, analysis and monitored internal ratios related to liquidity risk are presented in ALCO report. Internal liquidity metrics are monitored with limit and alert levels approved by the Board of Directors and reported regularly to related parties.
Decentralized management approach is adopted in the Bank's liquidity management. Each subsidiary controlled by the Bank performs daily, medium and long term liquidity management independently from the Bank by the authorities in each subsidiary responsible for managing liquidity risk. In addition, within the scope of consolidated risk management, liquidity and funding risk of each subsidiary in control are monitored via the liquidity risk management methods identified by the Bank by considering the operations, risk profile and regulations of the related subsidiary.
The Bank's funding management is carried out in compliance with the ALCO decisions. Funding and placement strategies are developed by assessing liquidity of the Bank.
In liquidity risk management actions that will be taken and procedures are determined by considering normal economic conditions and stress conditions.
Diversification of assets and liabilities is assured so as to be able to continuously meet the obligations, also taking into account the relevant currencies. Funding sources are monitored actively during identification of concentration risk related to funding. The Bank's funding base of customer deposits, interbank and other borrowing transactions are diversified in order to prevent the concentration of a particular funding source. Factors that could trigger the sudden and significant run off in funds or impair the accessibility of the funding sources are analyzed. Additionally, securities which are eligible as collateral at CBRT issued by Republic of Turkey Treasury and have active secondary market are comprised in the Bank's assets.
In the context of TL and foreign currencies liquidity management, the Bank monitors the cash flows regarding assets and liabilities and forecasts the required liquidity in future periods. In cash flow analysis, stress is applied to items that affect the liquidity by volume and rate of change from a liquidity management point of view.
Liquidity risk exposed by the Bank is managed by establishing risk appetite, risk mitigation according to the liquidity and funding policies (diversification of funding sources, holding high quality liquid assets reserve) and effective control environment and closely monitoring by limits. For those risks that cannot be reduced, the adoption of the current level of risk, reduction or termination of the activities that cause the risk is considered.
In liquidity risk stress testing framework, the level of the Bank's ability to cover cash outflows in liquidity crisis scenario based on the Bank's current cash flow structure, by high quality liquid assets is calculated. Scenario analysis are performed by assessing changing balance sheet structure, liquidity requirements and market conditions.
The results of liquidity risk stress testing are taken into consideration in the assessment of liquidity adequacy and identification of policy regarding liquidity risk and contingency funding plan is prepared within this framework.
There exists "Liquidity Emergency Plan" in the Bank including mechanisms to prevent increase in liquidity risk scenarios for different conditions and levels. Available liquidity sources are determined by considering the liquidity squeezes. Within the framework of this plan, the Bank monitors liquidity risk in terms of early warning indicators and probable scenarios where liquidity risk crises and possible actions that can be taken.
The Bank's liabilities consist of TL and foreign currency funding, of which a large portion is USD/EUR. Deposits and capital constitute most of TL funding. For the reasons like real person customers can not use foreign currency credit but are able to deposit foreign currency funds, TL and foreign currency deposit and credit amount may differ. Long term funding obtained from foreign banks and creditors are mainly in foreign currency. For these reasons overall foreign currency liabilities are usually more than foreign currency liabilities. Unused portion of USD and EUR foreign currency funding is turned to TL via currency swap transactions and used in TL funding. Lines extended by CBRT and BİST aren't used to full extent, unused limits and high quality liquid asset stock is held is kept to use in the case of a liquidity scarcity in market. Also T.C. Eurobonds aren't used to secure funding and kept as reserve to use in the case of a foreign currency liquidity scarcity in market. In TL and foreign currency liquidity management, regulatory ratios, internally set warnings, limits and other liquidity and funding metrics are monitored.
4.6.1 Liquidity coverage ratio
Liquidity Coverage Ratio (LCR), aims for the banks having the ability to cover 30 days of liquidity needs with their own cash and high quality liquid assets that are easy to convert to cash during liquidity shortages in the markets. With that perspective and according to "Regulation for Banks' Liquidity Coverage Ratio Calculations" (the Regulation) terms LCR ratio is calculated by having high quality liquid assets divided by net cash outflows. After a transition period that will end by 1 January 2019, in both bank-only and consolidated basis, LCR ratio should be at least 80% for foreign currency and 100% for total.
Items in balance sheet and off balance sheet items are taken into account after being multiplied by the coefficients advised in the Regulation. In LCR calculation cash inflows are limited by 75% of cash outflows and cash inflows from high quality liquid assets aren't included.
High quality liquid assets consist of cash, deposits in central banks and securities considered as high quality liquid assets. Reserve deposits are included in high quality liquid assets, limited by the amount that is allowed by central bank to use in liquidity shortages. The Bank's high quality liquid assets are composed of 4.66% cash, 50.58% deposits in central banks and 44.62% securities considered as high quality liquid assets.
The Bank's main funding sources are deposits, funds borrowed, money market borrowings and securities issued. Funding source composition in report date is 68.08% deposits, 21.14% funds borrowed and money market borrowings and 6.94% securities issued.
In LCR calculation, cash outflows are mainly consist of deposits, secured and unsecured borrowings, securities issued and off balace sheet items.
The cash flows from derivative financial instruments are included in LCR calculations according to Regulation's terms. The Bank also considers changes in fair value of the liabilities that result in margin calls when calculating cash outflows.
Current Period | Total Unweighted Value (Average) (*) | Total Weighted Value (Average) (*) | |||
| TL+FC | FC | TL+FC | FC | |
High-Quality Liquid Assets | | | 38,835,305 | 19,540,092 | |
1 | Total high-quality liquid assets (HQLA) | 46,512,925 | 25,746,123 | 38,835,305 | 19,540,092 |
Cash Outflows | | | | | |
2 | Retail deposits and deposits from small business customers, of which: | 105,424,258 | 46,163,615 | 8,669,017 | 4,286,621 |
3 | Stable deposits | 24,131,224 | - | 1,120,378 | - |
4 | Less stable deposits | 81,293,033 | 46,163,615 | 7,548,639 | 4,286,621 |
5 | Unsecured wholesale funding, of which: | 43,358,024 | 23,960,602 | 22,621,537 | 12,415,263 |
6 | Operational deposits | - | - | - | - |
7 | Non-operational deposits | 34,102,671 | 21,343,725 | 16,418,382 | 10,064,078 |
8 | Unsecured funding | 9,255,353 | 2,616,877 | 6,203,155 | 2,351,184 |
9 | Secured wholesale funding | | | 342,707 | 342,707 |
10 | Other cash outflows of which: | 51,592,370 | 14,605,068 | 10,661,642 | 9,671,066 |
11 | Outflows related to derivative exposures and other collateral requirements | 7,987,916 | 9,169,525 | 7,417,350 | 8,514,559 |
12 | Outflows related to restructured financial instruments | - | - | - | - |
13 | Payment commitments and other off-balance sheet commitments granted for debts to financial markets | 43,604,454 | 5,435,543 | 3,244,292 | 1,156,507 |
14 | Other revocable off-balance sheet commitments and contractual obligations | 1,451,196 | 1,444,887 | 67,377 | 67,084 |
15 | Other irrevocable or conditionally revocable off-balance sheet obligations | 55,210,937 | 38,427,025 | 2,563,365 | 1,784,112 |
16 | Total Cash Outflows | | | 44,925,645 | 28,566,853 |
Cash Inflows | | | | | |
17 | Secured receivables | - | - | - | - |
18 | Unsecured receivables | 14,943,851 | 4,830,047 | 9,153,351 | 3,425,254 |
19 | Other cash inflows | 1,325,052 | 5,914,162 | 1,230,405 | 5,491,722 |
20 | Total Cash Inflows | 16,268,903 | 10,744,209 | 10,383,756 | 8,916,976 |
| | | | Total Adjusted Value | |
21 | Total HQLA | | | 38,835,305 | 19,540,092 |
22 | Total Net Cash Outflows | | | 34,541,889 | 19,649,877 |
23 | Liquidity Coverage Ratio (%) | | | 113.06 | 94.26 |
(*) The average of last three months' liquidity coverage ratio calculated by weekly simple averages.
The table below presents highest, lowest and average liquidity coverage ratios of the last three months of 2016:
Current Period | Highest | Date | Lowest | Date | Average |
TL+FC | 128.41
| 21.10.2016
| 99.22
| 23.11.2016
| 113.06 |
FC | 128.99
| 22.12.2016
| 71.48
| 01.01.2017
| 94.26 |
Prior Period | Total Unweighted Value (Average) (*) | Total Weighted Value (Average) (*) | |||
| TL+FC | FC | TL+FC | FC | |
High-Quality Liquid Assets | | | 38,348,358 | 25,408,589 | |
1 | Total high-quality liquid assets (HQLA) | 42,874,723 | 29,921,484 | 38,348,358 | 25,408,589 |
Cash Outflows | | | | | |
2 | Retail deposits and deposits from small business customers, of which: | 92,521,984 | 41,069,069 | 7,905,352 | 3,760,902 |
3 | Stable deposits | 26,936,931 | 6,920,088 | 1,346,847 | 346,004 |
4 | Less stable deposits | 65,585,053 | 34,148,981 | 6,558,505 | 3,414,898 |
5 | Unsecured wholesale funding, of which: | 41,271,520 | 24,505,286 | 23,947,340 | 14,163,857 |
6 | Operational deposits | - | - | - | - |
7 | Non-operational deposits | 32,677,280 | 21,047,652 | 16,872,374 | 10,757,484 |
8 | Unsecured funding | 8,594,240 | 3,457,634 | 7,074,966 | 3,406,373 |
9 | Secured wholesale funding | | | 11,883 | 11,883 |
10 | Other cash outflows of which: | 51,866,774 | 15,188,053 | 9,926,636 | 7,329,223 |
11 | Outflows related to derivative exposures and other collateral requirements | 6,204,411 | 5,718,456 | 6,204,411 | 5,718,456 |
12 | Outflows related to restructured financial instruments | - | - | - | - |
13 | Payment commitments and other off-balance sheet commitments granted for debts to financial markets | 45,662,364 | 9,469,598 | 3,722,225 | 1,610,767 |
14 | Other revocable off-balance sheet commitments and contractual obligations | 1,142 | 1,142 | 57 | 57 |
15 | Other irrevocable or conditionally revocable off-balance sheet obligations | 48,496,094 | 33,790,824 | 2,424,805 | 1,689,539 |
16 | Total Cash Outflows | | | 44,216,072 | 26,955,461 |
Cash Inflows | | | | | |
17 | Secured receivables | - | - | - | - |
18 | Unsecured receivables | 15,152,924 | 4,637,853 | 10,363,531 | 3,768,776 |
19 | Other cash inflows | 629,706 | 272,874 | 629,706 | 272,874 |
20 | Total Cash Inflows | 15,782,628 | 4,910,727 | 10,993,237 | 4,041,651 |
| | | | Total Adjusted Value | |
21 | Total HQLA | | | 38,348,358 | 25,408,589 |
22 | Total Net Cash Outflows | | | 33,222,835 | 22,913,810 |
23 | Liquidity Coverage Ratio (%) | | | 115.74 | 112.46 |
(*) The average of last three months' liquidity coverage ratio calculated by weekly simple averages.
The table below presents highest, lowest and average liquidity coverage ratios of the last three months of 2015:
Prior Period | Highest | Date | Lowest | Date | Average |
TL+FC | 128.31 | 21.12.2015 | 98.31 | 02.11.2015 | 115.74 |
FC | 155.29 | 29.09.2015 | 92.10 | 12.11.2015 | 112.46 |
4.6.2 Contractual maturity analysis of liabilities according to remaining maturities
The remaining maturities table of the contractual liabilities includes the undiscounted future cash outflows for the principal amounts of the Bank's financial liabilities as per their earliest likely contractual maturities.
Current Period |
Carrying Value | Gross Nominal Outflows | Demand |
Up to 1 Month | 1-3 Months | 3-12 Months | 1-5 Years | 5 Years and Over |
Bank Deposits | 3,718,546 | 3,711,684 | 2,849,336 | 645,554 | 9,261 | 207,533 | - | - |
Other Deposits | 157,513,051 | 156,948,877 | 35,952,232 | 88,681,184 | 20,644,243 | 11,443,292 | 219,303 | 8,623 |
Other Fundings | 40,286,368 | 40,042,185 | - | 446,491 | 1,466,844 | 17,535,162 | 13,512,311 | 7,081,377 |
Interbank Money Market Takings | 9,769,387 | 9,763,295 | - | 9,763,295 | - | - | - | - |
Securities Issued | 16,436,879 | 16,109,622 | - | 471,698 | 1,258,500 | 4,599,655 | 7,636,078 | 2,143,691 |
Total | 227,724,231 | 226,575,663 | 38,801,568 | 100,008,222 | 23,378,848 | 33,785,642 | 21,367,692 | 9,233,691 |
Prior Period |
Carrying Value | Gross Nominal Outflows | Demand |
Up to 1 Month | 1-3 Months | 3-12 Months | 1-5 Years | 5 Years and Over |
Bank Deposits | 5,520,979 | 5,515,577 | 1,814,011 | 2,559,671 | 1,004,933 | 136,962 | - | - |
Other Deposits | 135,378,353 | 134,876,900 | 29,665,353 | 69,206,976 | 23,288,593 | 12,511,667 | 194,246 | 10,065 |
Other Fundings | 33,597,589 | 33,403,617 | - | 1,000,751 | 1,312,560 | 11,554,641 | 13,604,248 | 5,931,417 |
Interbank Money Market Takings | 15,068,161 | 15,050,907 | - | 12,530,501 | 242 | 2,520,164 | - | - |
Securities Issued | 14,198,769 | 13,894,277 | - | 124,634 | 985,455 | 2,811,388 | 6,817,441 | 3,155,359 |
Total | 203,763,851 | 202,741,278 | 31,479,364 | 85,422,533 | 26,591,783 | 29,534,822 | 20,615,935 | 9,096,841 |
4.6.3 Maturity analysis of assets and liabilities according to remaining maturities:
|
Demand | Up to 1 Month | 1-3 Months | 3-12 Months | 1-5 Years | 5 Years and Over | Undistributed (*) |
Total |
Current Period | | | | | | | | |
Assets | | | | | | | | |
Cash (Cash on Hand, Money in Transit, Purchased Cheques) and Balances with the Central Bank of Turkey | 8,284,784 | 15,500,350 | - | - | - | - | - | 23,785,134 |
Banks | 4,447,952 | 2,173,450 | 1,242,864 | 884,960 | 3,569,700 | - | - | 12,318,926 |
Financial Assets at Fair Value through Profit/Loss | - | 956,423 | 624,092 | 1,239,370 | 364,422 | 322,121 | - | 3,506,428 |
Interbank Money Market Placements | - | 351,691 | - | - | - | - | - | 351,691 |
Financial Assets Available-for-Sale | 194,907 | 23,065 | 31,068 | 498,172 | 10,102,810 | 9,062,547 | - | 19,912,569 |
Loans | 336,437 | 31,107,678 | 15,169,005 | 45,379,745 | 68,144,813 | 21,969,347 | 3,941,203 | 186,048,228 |
Investments Held-to-Maturity | - | 139,741 | 452,201 | 181,994 | 9,023,268 | 13,842,980 | - | 23,640,184 |
Other Assets | 1,965,197 | 1,300,264 | 176 | 5,870 | 424,349 | 177,796 | 10,718,588 | 14,592,240 |
Total Assets | 15,229,277 | 51,552,662 | 17,519,406 | 48,190,111 | 91,629,362 | 45,374,791 | 14,659,791 | 284,155,400 |
| | | | | | | | |
Liabilities | | | | | | | | |
Bank Deposits | 2,849,464 | 648,098 | 9,275 | 211,709 | - | - | - | 3,718,546 |
Other Deposits | 35,952,232 | 88,989,563 | 20,761,897 | 11,579,545 | 221,134 | 8,680 | - | 157,513,051 |
Other Fundings | - | 578,184 | 1,548,844 | 17,565,510 | 13,512,453 | 7,081,377 | - | 40,286,368 |
Interbank Money Market Takings | - | 9,769,387 | - | - | - | - | - | 9,769,387 |
Securities Issued | - | 472,538 | 1,260,374 | 4,625,139 | 7,902,731 | 2,176,097 | - | 16,436,879 |
Miscellaneous Payables | 1,152,182 | 7,935,957 | - | - | - | - | - | 9,088,139 |
Other Liabilities (**) | 1,800,785 | 1,056,502 | 823,203 | 1,089,573 | 669,368 | 646,105 | 41,257,494 | 47,343,030 |
Total Liabilities | 41,754,663 | 109,450,229 | 24,403,593 | 35,071,476 | 22,305,686 | 9,912,259 | 41,257,494 | 284,155,400 |
| | | | | | | | |
Liquidity Gap | (26,525,386) | (57,897,567) | (6,884,187) | 13,118,635 | 69,323,676 | 35,462,532 | (26,597,703) | - |
| | | | | | | | |
Net Off-Balance Sheet Position | - | 568,524 | (102,511) | 547,321 | (14,041) | 87,715 | - | 1,087,008 |
Derivative Financial Assets | - | 57,011,286 | 23,414,855 | 29,279,277 | 7,694,661 | 967,692 | - | 118,367,771 |
Derivative Financial Liabilities | - | 56,442,762 | 23,517,366 | 28,731,956 | 7,708,702 | 879,977 | - | 117,280,763 |
Non-Cash Loans | - | 5,280,818 | 3,890,088 | 5,972,633 | 136,128 | - | 89,084,131 | 104,363,798 |
| | | | | | | | |
Prior Period | | | | | | | | |
Total Assets | 11,849,181 | 54,008,097 | 13,649,684 | 43,790,139 | 77,418,789 | 41,432,766 | 12,193,930 | 254,342,586 |
Total Liabilities | 35,708,826 | 93,434,062 | 27,222,063 | 30,759,578 | 21,373,798 | 9,521,998 | 36,322,261 | 254,342,586485 |
Liquidity Gap | (23,859,645) | (39,425,965) | (13,572,379) | 13,030,561 | 56,044,991 | 31,910,768 | (24,128,331) | - |
Net Off-Balance Sheet Position | - | (2,435) | (23,324) | (503,480) | 9,882 | 87,117 | - | (432,240) |
Derivative Financial Assets | - | 40,312,873 | 17,317,421 | 31,938,167 | 9,819,947 | 1,027,585 | - | 100,415,993 |
Derivative Financial Liabilities | - | 40,315,308 | 17,340,745 | 32,441,647 | 9,810,065 | 940,468 | - | 100,848,233 |
Non-Cash Loans | - | 3,916,751 | 2,668,070 | 7,640,061 | 294,530 | - | 83,888,838 | 98,408,250 |
(*) Certain assets on the balance sheet that are necessary for the banking operations but not convertable into cash in short period such as tangible assets, investments in associates and affiliates, stationary supplies, prepaid expenses and loans under follow-up, are included in this column.
(**) Shareholders' equity is included in "other liabilities" line under "undistributed" column.
4.7 Leverage ratio
The leverage ratio table prepared in accordance with the communiqué "Regulation on Measurement and Assessment of Leverage Ratios of Banks" published in the Official Gazette no. 28812 dated 5 November 2013 is presented below:
The Bank's leverage ratio calculated by taking average of end of month leverage ratios for the last three-month period is 8.83% (31 December 2015: 8.42%). Main reason for the variance compared to December 2015, is the increase in Tier I Capital higher than other items. While the capital increased by 14.9% mainly as a result of increase in net profits, the balance sheet exposure increased by 11.33% and the off balance sheet exposure increased by 3.63%. Therefore, the current period leverage ratio increased by 41 basis points compared to prior period.
On-balance sheet assets | Current Period (*) | Prior Period (*) | |
1 | On-balance sheet items (excluding derivative financial instruments and credit derivatives but including collateral) | 278,685,369 | 250,277,784 |
2 | (Assets deducted in determining Tier I capital) | (300,326) | (220,586) |
3 | Total on-balance sheet risks (sum of lines 1 and 2) | 278,385,043 | 250,057,198 |
Derivative financial instruments and credit derivatives | | | |
4 | Replacement cost associated with all derivative instruments and credit derivatives | 3,285,514 | 2,353,340 |
5 | Add-on amounts for PFE associated with all derivative instruments and credit derivatives | 8,303,567 | 7,129,895 |
6 | Total risks of derivative financial instruments and credit derivatives (sum of lines 4 to 5) | 11,589,080 | 9,483,235 |
Securities or commodity financing transactions (SCFT) | | | |
7 | Risks from SCFT assets (excluding on-balance sheet) | 1,586,346 | 1,038,962 |
8 | Risks from brokerage activities related exposures | - | - |
9 | Total risks related with securities or commodity financing transactions (sum of lines 7 to 8) | 1,586,346 | 1,038,962 |
Other off-balance sheet transactions | | | |
10 | Gross notional amounts of off-balance sheet transactions | 105,623,641 | 99,470,017 |
11 | (Adjustments for conversion to credit equivalent amounts) | (2,550,420) | (3,948) |
12 | Total risks of off-balance sheet items (sum of lines 10 and 11) | 103,073,221 | 99,466,069 |
Capital and total risks | | | |
13 | Tier I capital | 34,842,798 | 30,325,091 |
14 | Total risks (sum of lines 3, 6, 9 and 12) | 394,633,690 | 360,045,464 |
Leverage ratio | | | |
15 | Leverage ratio | 8.83% | 8.42% |
(*) Amounts in the table are three-month average amounts.
4.8 Fair values of financial assets and liabilities
| Carrying Value | Fair Value | ||
Current Period | Prior Period | Current Period | Prior Period | |
Finansal Assets | 263,138,119 | 236,364,856 | 264,414,464 | 237,884,362 |
Interbank Money Market Placements | 351,691 | 61,069 | 351,691 | 61,069 |
Banks (*) | 33,185,447 | 34,690,133 | 33,185,447 | 34,690,133 |
Financial Assets Available-for-Sale | 19,912,569 | 20,519,801 | 19,912,569 | 20,519,801 |
Investments Held-to-Maturity | 23,640,184 | 21,755,812 | 23,329,795 | 21,906,006 |
Loans | 186,048,228 | 159,338,041 | 187,634,962 | 160,707,353 |
Financial Liabilities | 227,042,983 | 197,032,542 | 227,042,983 | 197,032,542 |
Bank Deposits | 3,718,546 | 5,520,979 | 3,718,546 | 5,520,979 |
Other Deposits | 157,513,051 | 135,378,353 | 157,513,051 | 135,378,353 |
Other Fundings | 40,286,368 | 33,597,589 | 40,286,368 | 33,597,589 |
Securities Issued | 16,436,879 | 14,198,769 | 16,436,879 | 14,198,769 |
Miscellaneous Payables | 9,088,139 | 8,336,852 | 9,088,139 | 8,336,852 |
(*) Including the balances at the Central Bank of Turkey
Fair values of financial assets available-for-sale and investments held-to-maturity are derived from market prices or in case of absence of such prices, market prices of other securities quoted in similar qualified markets and having substantially similar characteristics in terms of interest, maturity and other conditions.
Fair values of loans are calculated discounting future cash flows at current market interest rates for fixed-rate loans. The carrying values of floating-rate loans are deemed an approximation for their fair values.
Fair values of other financial assets and liabilities represent the total acquisition costs and accrued interest.
The table below analyses financial instruments carried at fair value, by valuation method:
Current Period | Level 1 | Level 2 | Level 3 | Total |
Financial Assets Available-for-Sale | 19,104,438 | 246,183 | 561,948 | 19,912,569 |
Financial Assets Held for Trading | 115,443 | - | - | 115,443 |
Derivative Financial Assets Held for Trading | 12,449 | 3,378,536 | - | 3,390,985 |
Loans | - | - | - | - |
Investments in Associates and Subsidiaries | - | - | 5,069,628 | 5,069,628 |
Derivative Financial Assets Held for Risk Management | - | 589,214 | - | 589,214 |
Financial Assets at Fair Value | 19,232,330 | 4,213,933 | 5,631,576 | 29,077,839 |
| | | | |
Derivative Financial Liabilities Held for Trading | 977 | 3,495,645 | - | 3,496,622 |
Funds Borrowed | - | 1,763,177 | - | 1,763,177 |
Derivative Financial Liabilities Held for Risk Management | - | 279,536 | - | 279,536 |
Financial Liabilities at Fair Value | 977 | 5,538,358 | - | 5,539,335 |
Prior Period | Level 1 | Level 2 | Level 3 | Total |
Financial Assets Available-for-Sale | 14,267,634 | 5,721,163 | 531,004 | 20,519,801 |
Financial Assets Held for Trading | 135,535 | 31,325 | - | 166,860 |
Derivative Financial Assets Held for Trading | 285 | 1,483,204 | - | 1,483,489 |
Loans | - | 198,118 | - | 198,118 |
Investments in Associates and Subsidiaries | - | - | 4,342,263 | 4,342,263 |
Derivative Financial Assets Held for Risk Management | - | 680,997 | - | 680,997 |
Financial Assets at Fair Value | 14,403,454 | 8,114,807 | 4,873,267 | 27,391,528 |
| | | | |
Derivative Financial Liabilities Held for Trading | 3,617 | 2,260,020 | - | 2,263,637 |
Funds Borrowed | - | 5,688,704 | - | 5,688,704 |
Derivative Financial Liabilities Held for Risk Management | - | 250,491 | - | 250,491 |
Financial Liabilities at Fair Value | 3,617 | 8,199,215 | - | 8,202,832 |
Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 : Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices)
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
4.9 Transactions carried out on behalf of customers and items held in trust
None.
4.10 Risk management objectives and policies
The notes under this caption are prepared as per the "Regulation on Calculation of Risk Management Disclosures" published in the Official Gazette no. 29511 dated 23 October 2015.
4.10.1 Risk management strategy and weighted amounts
4.10.1.1 Risk management strategy
The Bank's risk management strategy is to ensure that risk management culture is recognized and risk management principles are widely embraced throughout the Bank and its affiliates, an integrated risk management system is established which pursues risk-return-capital relationship. Essential principles are adopted in order to ensure that policies determined to assess and manage risks the Bank is exposed to, are kept updated, adapted to changing conditions, applied and managed.
It is the ultimate responsibility of the senior management to apply and improve risk management strategies, policies and procedures that are approved by the board of directors, inform the board of directors about the important risks the Bank is exposed to, assess internal control, internal audit and risk reports with regard to the Banks' departments and to eliminate the risks, deficiencies or defects identified in these departments or to take the necessary precautionary actions to prevent those risks, deficiencies and defects and participate in the determination of risk limits.
Policies and procedures regarding risk management are established for consolidated affiliates. Policies and procedures are prepared in compliance with applicable legislations that the affiliate subject to and the parent Bank's risk management strategy, reviewed regularly and revised if necessary. The parent Bank ensures that risk management system is applied in affiliates where risks are defined, measured, monitored and controlled.
Risk management activities are structured under the responsibility of the board of directors. The Risk Committee composed of the members of the board is responsible to oversee the Bank's risk management policies and practices, including the alignment with its strategic objectives and management's ability to assess and manage the various risks present in its activities including capital adequacy and planning and liquidity adequacy, as well as all other risk management functions envisioned under the applicable laws and regulations. Upper level management is responsible against the board of directors for the monitoring and management of risks that their departments are exposed to. Accordingly, the Risk Management, which
performs risk management functions, reports to the board of directors via the Risk Committee, whereas the Internal Audit Department, performing internal audit functions, the Internal Control Unit, performing internal control functions, and the Compliance Department, which implements compliance controls and performs activities to prevent laundering proceeds of crime, and financing of terrorism, report directly to the board of directors.
The Bank's main approach for the implementation of risk management model is establishing risk culture throughout the Bank, and aims that the importance of risk management for maintaining business operations is understood and risk awareness and sensitivity is ensured for decision making and implementation mechanisms process by all employees.
The Bank measures and monitors risks that exposed to, considering methods suitable with international standards, compliant with legislation. Risk measuring and reporting are performed via advanced methods and risk management softwares. Risk based detailed reports are prepared for management of significant risks, in order to determine strategies and take decisions, in this scope, periodic and non-periodic reports are prepared for board of directors, relevant committees and senoir management
The Bank's risk appetite framework determines the risk level that the board of directions is prepared to accept in order to accomplish the goals and strategies with due consideration to the capacity of the institution to safely absorbs those risks and the Bank monitors regularly risk appetite metrics regarding capital, liquidity, income recurrence and risk based limits. Risks that the Bank is exposed, is managed by providing effective control environment and monitoring limits. Unmitigated risks are either accepted with current risk levels or decreasing/ terminating the activity that causes the risk.
The Risk Management conducts the implementation of internal capital adequacy assessment report to be sent to the BRSA, by coordinating relevant parties. Stress test report is reported to the BRSA, which evaluates how adverse effects on macroeconomic parameters, in the scope of determined scenarios, affect the Bank's three year budget plan and results, and certain ratios, including capital adequacy.
Training programs for employees, risk reports to the board of directors, senior management and committees, risk appetite framework established by the Bank and internal capital adequacy assessment process generate significant inputs to ensure that risk management culture is widely embraced.
4.10.1.2 Risk weighted amounts
|
Risk Weighted Amounts | Minimum Capital Requirements | ||
| Current Period | Prior Period | Current Period | |
1 | Credit risk (excluding counterparty credit risk) (CCR) (*) | 202,032,520 | 193,517,157 | 16,162,602 |
2 | Of which standardised approach (SA) | 202,032,520 | 193,517,157 | 16,162,602 |
3 | Of which internal rating-based (IRB) approach | - | - | - |
4 | Counterparty credit risk | 5,270,570 | 2,378,806 | 421,646 |
5 | Of which standardised approach for counterpary credit risk (SA-CCR) | 5,270,570 | 2,378,806 | 421,646 |
6 | Of which internal model method (IMM) | - | - | - |
7 | Equity position in banking book under basic risk weighting or internal rating-based | - | - | - |
8 | Equity investments in funds - look-through approach | - | - | - |
9 | Equity investments in funds - mandate-based approach | - | - | - |
10 | Equity investments in funds - 1250% risk weighting approach | - | - | - |
11 | Settlement risk | - | - | - |
12 | Securitisation exposures in banking book | - | - | - |
13 | Of which IRB ratings-based approach (RBA) | - | - | - |
14 | Of which IRB supervisory formula approach (SFA) | - | - | - |
15 | Of which SA/simplified supervisory formula approach (SSFA) | - | - | - |
16 | Market risk | 5,704,124 | 6,279,160 | 456,330 |
17 | Of which standardised approach (SA) | 5,704,124 | 6,279,160 | 456,330 |
18 | Of which internal model approaches (IMM) | - | - | - |
19 | Operational risk | 18,931,681 | 16,906,172 | 1,514,534 |
20 | Of which basic indicator approach | 18,931,681 | 16,906,172 | 1,514,534 |
21 | Of which standardised approach | - | - | - |
22 | Of which advanced measurement approach | - | - | - |
23 | Amounts below the thresholds for deduction from capital (subject to 250% risk weight) | 383,449 | 998,611 | 30,676 |
24 | Floor adjustment | - | - | - |
25 | Total (1+4+7+8+9+10+11+12+16+19+23+24) | 232,322,344 | 220,079,906 | 18,585,788 |
(*) Excluding equity investments in funds and amounts below the thresholds for deductions from capital.
4.10.2 Linkages between financial statements and risk amounts
4.10.2.1 Differences and matching between asset and liabilities' carrying values in financial statements and risk amounts in capital adequacy calculation
| | Carrying values of items in accordance with Turkish Accounting Standards | |||
| Carrying values in financial statements prepared as per TAS |
Subject to credit risk |
Subject to counterparty credit risk |
Subject to market risk (*) | Not subject to capital requirements or subject to deduction from capital |
Assets | | | | |
|
Cash (Cash on Hand, Money in Transit, Purchased Cheques) and Balances With Central Bank of Turkey | 23,785,134 | 23,785,134 | - | - | - |
Financial Assets Held for Trading | 3,506,428 | 7,840 | 3,383,147 | 1,298,044 | - |
Financial Assets at Fair Value Through Profit or Loss | - | - | - | - | - |
Banks | 12,318,926 | 12,318,926 | - | - | - |
Interbank Money Markets Placements | 351,691 | 351,691 | - | - | - |
Financial Assets Available-for-Sale | 19,912,569 | 18,829,615 | 5,044,027 | 1,081,227 | 1,730 |
Loans | 186,048,228 | 186,011,235 | - | - | 36,994 |
Factoring Receivables | - | - | - | - | - |
Investment Held-to-Maturity | 23,640,184 | 23,640,184 | 8,308,738 | - | - |
Investment in Associates | 36,698 | 36,698 | - | - | - |
Investment in Subsidiaries | 5,173,864 | 5,173,864 | - | - | - |
Investment in Joint-Ventures | - | - | - | - | - |
Lease Receivables | - | - | - | - | - |
Derivative Financial Assets Held for Risk Management | 589,214 | - | 589,214 | - | - |
Tangible Assets | 3,388,748 | 3,285,711 | - | - | 103,037 |
Intangible Assets | 239,013 | 25,669 | - | - | 213,344 |
Investment Property | 670,370 | 670,370 | - | - | - |
Tax Asset | 127,709 | 127,709 | - | - | - |
Assets Held for Sale and Assets of Discontinued Operations | 589,726 | 533,866 | - | - | 55,860 |
Other Assets | 3,776,898 | 3,776,898 | - | - | - |
Total Assets | 284,155,400 | 278,575,410 | 17,325,126 | 2,379,271 | 410,965 |
Liabilities | | | | | |
Deposits | 161,231,597 | - | - | - | 161,231,597 |
Derivative Financial Liabilities Held for Trading | 3,496,622 | - | - | - | 3,496,622 |
Funds Borrowed | 40,286,368 | - | 5,798,862 | - | 34,487,506 |
Interbank Money Markets | 9,769,387 | - | 7,268,206 | - | 2,501,181 |
Securities Issued | 16,436,879 | - | - | - | 16,436,879 |
Funds | - | - | - | - | - |
Miscellaneous Payables | 9,088,139 | - | - | - | 9,088,139 |
Other External Fundings Payable | 2,981,312 | - | - | 21,136 | 2,960,176 |
Factoring Payables | - | - | - | - | - |
Lease Payables | 17,092 | - | - | - | 17,092 |
Derivative Financial Liabilities Held for Risk Management | 279,536 | - | - | - | 279,536 |
Provisions | 4,614,004 | - | - | - | 4,614,004 |
Tax Liability | 415,384 | - | - | - | 415,384 |
Liabilities for Assets Held for Sale and Assets of Discontinued Operations | - | - | - | - | - |
Subortinated Debts | - | - | - | - | - |
Shareholders' Equity | 35,539,080 | - | - | - | 35,539,080 |
Total Liabilities | 284,155,400 | - | 13,067,068 | 21,136 | 271,067,196 |
(*) Disclosed based on gross position amounts subject to general market risk and specific risk.
4.10.2.2 Major items causing differences between assets and liabilities' carrying values in financial statements and risk amounts in capital adequacy calculation
| | Total | Credit risk | Counterparty credit risk | Market risk (*) |
1 | Carrying Value of Assets in Accordance with Communiqué "Preparation of Financial Statements" | 270,391,670 | 265,222,644 | 3,972,361 | 2,379,271 |
2 | Carrying Value of Debt Instruments that are Subjected to Counterparty Credit Risk as per TAS | 13,352,765 | 13,352,766 | 13,352,765 | - |
3 | Carrying Value of Liabilities that are Subjected to Counterparty Credit Risk as per TAS | 13,067,068 | - | 13,067,068 | - |
4 | Carrying Value of Other Liabilities as per TAS | 21,136 | - | - | 21,136 |
5 | Total Net Amount | 270,656,231 | 278,575,410 | 4,258,058 | 2,358,135 |
6 | Off-balance Sheet Amounts (**) | 249,440,858 | 40,412,624 | 1,639,214 | 158,558,970 |
7 | Differences Resulted from the BRSA's Applications | | (18,671,213) | (9,751) | - |
8 | Repurchase Transactions | | - | 1,479,742 | - |
9 | Risk Amounts | | 300,316,821 | 7,367,263 | 160,917,105 |
(*) Disclosed based on gross position amounts subject to general market risk and specific risk.
(**) Off-balance sheet amounts subject to capital adequacy ratios.
4.10.2.3 Explanations on differences between carrying values in financial statements and risk amounts in capital adequacy calculation of assets and liabilities
There is no material differences between the carrying values in financial statements and the risk amounts in capital adequacy calculation of assets and liabilities.
4.10.3 Credit risk
4.10.3.1 General information on credit risk
4.10.3.1.1 General qualitative information on credit risk
The Bank's credit risk management policies; under the relevant legislation in line with the bank's credit strategy approved by the Board are created based on the prudence, sustainability and customer's credit worthiness principles.
Diversification to avoid concentrations are performed while determining the Bank's credit risk profile. Credit portfolios are evaluated depending upon the credit type, managed aggregately during their life cycle. Customer selection is made in accordance with the policies and strategies, affordability of the borrower to fulfil on a timely basis all financial obligations with his expected cash flows from foreseeable specific transactions or from its regular operations; without depending upon guarantors, bails or pledged assets is predicated. Necessary risk rating/scoring models are developed for the different portfolios of the Bank. These models are created by ensuring the best separation of the customers in terms of their credibility and grading them using the objective criteria. The outputs of the internal rating and scoring models that developed based on the each portfolio, as well as an important part of the loan
approval process, but also these models are used measuring the default risk of the customer and the portfolio, doing analysis regarding expected loss, internal capital, risk-based analysis.
The general risk policy including the risk appetite and indicators is determined by the board of directors. Risk management is handled, in order to reach the determined targets, by carrying out a continuous monitoring process with a proper classification of risks and customers in scope of the effective management mentality. The limit framework and delegation rules are specified by establishing proper decision systems in order to assess the risks correctly. Optimum limit levels are determined by taking into account the loss and returns during the limit setting process.
The security intelligence and analysis are done in order to measure the creditworthiness of the customer that will be entered in a credit relationship. Before the credit decisions, customer analysis is examined and evaluated by producing all factors (qualitative and quantitative data) that effected and will be effected the historical, current and future performance of the customer.
Credit risk management is a structured process where credit risks are consistently assessed, quantified and monitored. In order to take the right decision, during the credit process which begins with the application of the customer and includes the phases of determination of the customer's credibility, collateralization, loan configuration, approval and usage, monitoring and closing the exposure, all required information and documents intended to identify the customer are collected in a centralized database, with this information the customer's financial strength is analysed, credit risk analysis is done, are graded according to customer segment and activity fields and the information is kept updated by inquiring the customers. Before a loan is granted, it is ensured that risks are well-understood, sufficient evaluation has been done and after the loan is granted the loan is monitored, controlled and reported.
Credit risk is managed on a portfolio basis considering the risk/return balance and asset quality of the Bank in the scope of the principles specified in the credit risk policy documents. Furthermore, loan based assessment, allocation and monitoring are carried out within the framework of related processes by related units in the Credit Group. Credit proposals, on the basis of the determined amount and in the framework of levels of authority, are concluded after being evaluated by the Regional Offices, Loans units of Headquarter, if required by the credit committee and the board of directors. The credit approval authority can be transferred starting from the board of directors. The authorities of the Headquarter and Credit Regional Offices are notified in written and the transfer of authority is done.
Each unit operating in credit risk management is responsible for identifying risks arising from its own process, activities and systems, informing senior management and taking necessary action to reduce risk level.
Risk management activities are conducted in accordance with the Bank's risk appetite and capacity by using risk measurement and management tools within the policies which is established by the board of directors.
In this context, organizational structure related to credit risk management and control functions are detailed below: Units within the scope of Credit Risk Management; Corporate and Special Loans, Commercial Loans, Featured Collections, Commercial Products Collection, Bank and Country Risk, Retail and SME Loans Risk Strategies, Retail and SME Loans Evaluation, Retail Products Collection, Risk Planning Monitoring and Reporting, Risk Analytics, Technology and Innovation, Market Risk and Credit Risk Control and Region Coordination.
In addition, decisions regarding the credit policy in the corporate governance framework are taken by the relevant committees. In this context, there are Corporate and Commercial Loans Risk Committee, Retail Loans Risk Committee, Risk Management Committee and Board of Risk Committee. Allocated limits and conditions that exceeding the limits with their usage, evaluations regarding major risks and non-performing loans with high risk, information regarding NPLs, the data regarding the portfolios of subsidiaries are reported to senior management on a regular basis.
The Risk Management measures, monitors and reports credit risks by using the Bank's probability of defaults obtained from the Bank's rating models, loss that is caused by defaulted customer and credit conversion factors. Bank's internal capital is calculated and adequacy is assesed by considering stress tests and scenario anaylsis. Also, the limits are determined for credit portfolios by considering optimum risk return balance and credit concentrations are monitored.
For credit risk, on-site and centralized controls of guarantees and contract are carried out by employees of the Internal Control Center. In this context, it is implemented a strategy which covers all branches. Internal control activities are carried out under the control programs prepared for the designated checkpoints and methodologies.
4.10.3.1.2 Credit quality of assets
| | Gross carrying value as per TAS | Allowances/amortisation and impairments | Net values | |
| | Defaulted | Non-defaulted exposures | ||
1 | Loans | 5,272,774 | 218,543,090 | 4,267,491 | 219,548,373 |
2 | Debt securities | - | 42,400,852 | - | 42,400,852 |
3 | Off-balance sheet exposures | 355,861 | 68,200,685 | 134,609 | 68,421,937 |
4 | Total | 5,628,635 | 329,144,627 | 4,402,100 | 330,371,162 |
4.10.3.1.3 Changes in stock of default loans and debt securities
| | Current Period |
1 | Defaulted loans and debt securities at end of the previous reporting period | 4,404,024 |
2 | Loans and debt securities defaulted since the last reporting period | 3,232,458 |
3 | Receivables back to non-defaulted status | - |
4 | Amounts written off | 1,077,347 |
5 | Other changes | 1,286,361 |
6 | Defaulted loans and debt securities at end of the reporting period | 5,272,774 |
4.10.3.1.4 Additional disclosure related to the credit quality of assets
4.10.3.1.4.1 Qualitative disclosures related to the credit quality of assets
Taking into consideration the general economic outlook, sector specific situations and possible regulation changes, the Bank determines the provision rates that will be applied and the collateral types that will be taken into account in the calculations; provided that those rates cannot be lower than what is determined in the related regulation. Related decisions are applied after the approval of the Bank's Risk Management Committee.
A refinancing/restructuring refers to; extending a new loan with the purpose of repayment of a part or whole of the outstanding loans or related interest payments granted previously or, amending the conditions of such outstanding loans in order to facilitate the repayment capacity; due to current or foreseeable financial difficulties of the borrower or the related risk group.
4.10.3.1.4.2 Breakdown of exposures by geographical areas, industry and ageing
Disclosed under section 4.2 credit risk.
4.10.3.1.4.3 Exposures provisioned against by major regions and sectors
Current Period | Loans Under Follow-Up | Specific Provisions | Write-Offs |
Domestic | 5,140,707 | 4,144,576 | 1,073,843 |
European Union (EU) Countries | 4,526 | 1,409 | 495 |
OECD Countries | 20 | 3 | - |
Off-Shore Banking Regions | 74,413 | 74,413 | - |
USA, Canada | - | - | 1 |
Other Countries | 53,108 | 47,090 | 3,008 |
Total | 5,272,774 | 4,267,491 | 1,077,347 |
Current Period | Loans Under Follow-Up | Specific Provisions | Write-Offs |
Agriculture | 42,998 | 26,300 | 10,734 |
Farming and Stockbreeding | 40,477 | 24,289 | 10,387 |
Forestry | 1,488 | 1,084 | 201 |
Fishery | 1,033 | 927 | 146 |
Manufacturing | 659,549 | 449,476 | 126,534 |
Mining and Quarrying | 29,091 | 23,832 | 4,636 |
Production | 488,299 | 356,108 | 121,333 |
Electricity, Gas and Water | 142,159 | 69,536 | 565 |
Construction | 404,457 | 278,947 | 60,051 |
Services | 1,420,865 | 946,327 | 267,685 |
Wholesale and Retail Trade | 734,157 | 509,407 | 223,128 |
Accomodation and Dining | 134,656 | 50,820 | 9,009 |
Transportation and Telecommunication | 470,766 | 318,912 | 29,692 |
Financial Institutions | 18,921 | 18,553 | 463 |
Real Estate and Rental Services | 10,713 | 7,508 | 1,238 |
Professional Services | 3,894 | 1,225 | 21 |
Educational Services | 30,779 | 27,586 | 1,472 |
Health and Social Services | 16,979 | 12,316 | 2,662 |
Others | 2,744,905 | 2,566,441 | 612,343 |
Total | 5,272,774 | 4,267,491 | 1,077,347 |
4.10.3.1.4.4 Ageing of past-due exposures
Current Period | Up to 3 Months | 3-12 Months | 1-3 Years | 3-5 Years | 5 Years and Over |
Corporate and Commercial Loans | 288,599 | 1,060,817 | 765,933 | 414,637 | 283,861 |
Retail Loans | 211,890 | 515,627 | 552,775 | 139,108 | 53,015 |
Credit Cards | 130,262 | 318,213 | 323,479 | 110,403 | 104,155 |
Others | - | - | - | - | - |
Total | 630,751 | 1,894,657 | 1,642,187 | 664,148 | 441,031 |
4.10.3.2 Credit risk mitigation
4.10.3.2.1 Qualitative disclosure on credit risk mitigation techniques
The Bank assesses the cash flow of the activity or investment subject to credit as the primary repayment source during the credit assignment process.
Calculating the value of the collateral depends on margins determined according to market and FX risks. Standard margins in use throughout the Bank are specific to type of the collateral and changes according to the currency of the collateral.
If credit assignment is conditioned to a collateral extension, the data of the collaterals must be entered to the banking information system. Operational transactions are handled by centralized Operation unit (ABACUS). During the credit utilization, compliance of all conditions between credit decision and credit utilization (such as collateral conditions) are controlled systematically.
The Bank monitors up to date value of the collaterals by type. Credit monitoring process involves the control of the balance between the value of the collateral and risk besides creditworthiness of the customer.
The Bank's credit risk exposure and mitigation techniques used in order to reduce the exposure level are taken into account according to the principles stated in the related regulation. The Bank applies credit risk mitigation according to the comprehensive method that includes risk mitigation calculations considering the volatility-adjusted values of financial collaterals The standardized risk weights are applied to the rest of the loans and receivables that remained unprotected after credit risk mitigation techniques. Financial collaterals, that are composed of cash or similar assets and instruments of a high credit quality as well as real estate mortgages have been used in credit risk mitigation.
4.10.3.2.2 Credit risk mitigation techniques
| | Exposures unsecured: carrying amount as per TAS | Exposures secured by | Collateralized amount of exposures secured by collateral | Exposures secured by financial guarantees | Collateralized amount of exposures secured by financial guarantees | Exposures secured by credit derivatives | Collateralized amount of exposures secured by credit derivatives |
1 | Loans | 169,225,213 | 50,323,160 | 41,649,191 | - | - | - | - |
2 | Debt securities | 42,400,852 | - | - | - | - | - | - |
3 | Total | 211,626,065 | 50,323,160 | 41,649,191 | - | - | - | - |
4 | Of which defaulted | 5,263,721 | 9,053 | 3,539 | - | - | - | - |
4.10.3.3 Credit risk under standardised approach
4.10.3.3.1 Qualitative disclosures on banks' use of external credit ratings under the standardised approach for credit risk
An international rating firm, Fitch Ratings' external risk ratings are used to determine the risk weights of the risk categories as per the Article 6 of the "Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks".
The international risk ratings are used for the exposures to central governments and central banks, whereas for central governments and central banks that are not rated by Fitch Ratings, the published country ratings as announced by the Organisation for Economic Cooperation and Development (OECD) are used.
According to the regulation on capital adequacy, external risk ratings are used only for the exposures to banks and brokerage houses and to corporates where the counterparties are resident in abroad, to determine their risk weights. Where the counterparties are domestic, the related exposures are included in the calculation of capital adequacy as unrated.
In the determination of risk weights; if a relevant rating is available then such rating, but if it is an unrated exposure then the rating available for the issuer is used.
Rating notes issued by Fitch Ratings are presented in the table below, as per credit quality levels and risk weights per risk classes:
Credit Quality Level | Fitch Ratings long term credit rating
| Risk Classes | |||
Exposures to Central Governments or Central Banks | Exposures to Banks and Brokerage Houses | Exposures to Corporates | |||
Exposures with Original Maturities Less Than 3 Months | Exposures with Original Maturities More Than 3 Months | ||||
1 | AAA to AA- | 0% | 20% | 20% | 20% |
2 | A+ to A- | 20% | 20% | 50% | 50% |
3 | BBB+ to BBB- | 50% | 20% | 50% | 100% |
4 | BB+ to BB- | 100% | 50% | 100% | 100% |
5 | B+ to B- | 100% | 50% | 100% | 150% |
6 | CCC+ and below | 150% | 150% | 150% | 150% |
4.10.3.3.2 Credit risk exposure and credit risk mitigation techniques
| | Exposures before CCF and CRM | Exposures post-CCF and CRM | RWA and RWA density | |||
| Risk classes | On-balance sheet amount | Off-balance sheet amount | On-balance sheet amount | Off-balance sheet amount | RWA | RWA density |
1 | Exposures to sovereigns and their central banks | 59,026,025 | 943,275 | 59,026,025 | 305,675 | 12,008,190 | 20.24% |
2 | Exposures to regional and local governments | 119,617 | 144 | 119,617 | 60 | 56,248 | 47.00% |
3 | Exposures to administrative bodies and non-commercial entities | 46,803 | 5,550 | 46,803 | 1,836 | 48,639 | 100.00% |
4 | Exposures to multilateral development banks | 190,237 | - | 190,237 | - | 55,402 | 29.12% |
5 | Exposures to international organizations | - | - | - | - | - | - |
6 | Exposures to banks and brokerage houses | 19,460,274 | 16,155,852 | 15,231,090 | 3,025,652 | 7,381,825 | 40.43% |
7 | Exposures to corporates | 90,625,121 | 50,984,161 | 88,536,942 | 20,026,901 | 105,680,104 | 97.34% |
8 | Retail exposures | 59,175,832 | 41,226,791 | 58,766,787 | 3,582,135 | 46,760,767 | 75.00% |
9 | Exposures secured by residential property | 18,572,321 | 151,697 | 18,568,045 | 77,622 | 6,525,984 | 35.00% |
10 | Exposures secured by commercial property | 16,338,647 | 1,655,679 | 16,323,202 | 960,619 | 11,054,150 | 63.96% |
11 | Past-due items | 705,142 | 1,363 | 705,142 | - | 596,794 | 84.63% |
12 | Exposures in high-risk categories | 300,186 | 129,325 | 300,186 | 58,543 | 509,274 | 141.97% |
13 | Exposures in the form of bonds secured by mortgages | - | - | - | - | - | - |
14 | Short term exposures to banks, brokerage houses and corporates | - | - | - | - | - | - |
15 | Exposures in the form of collective investment undertakings | - | - | - | - | - | - |
16 | Other exposures | 9,044,069 | - | 9,044,069 | - | 6,125,946 | 67.73% |
17 | Equity share investments | 5,266,254 | - | 5,266,254 | - | 5,229,197 | 99.30% |
18 | Total | 278,870,528 | 111,253,837 | 272,124,399 | 28,039,043 | 202,032,520 | 67.31% |
4.10.3.3.3 Exposures by asset classes and risk weights
| Regulatory portfolio |
0% |
10% |
20% | 35% secured by property mortgage |
50% |
75% |
100% |
150% |
200% |
Others | Total risk amount (post-CCF and CRM) |
1 | Exposures to sovereigns and their central banks | 35,315,311 | - | 25 | - | 24,016,357 | - | 7 | - | - | - | 59,331,700 |
2 | Exposures to regional and local government | - | - | 11,970 | - | 107,707 | - | - | - | - | - | 119,677 |
3 | Exposures to administrative bodies and non-commercial entities | - | - | - | - | - | - | 48,639 | - | - | - | 48,639 |
4 | Exposures to multilateral development banks | - | - | 132,386 | - | 57,851 | - | - | - | - | - | 190,237 |
5 | Exposures to international organizations | - | - | - | - | - | - | - | - | - | - | - |
6 | Exposures to banks and brokerage houses | - | - | 6,040,661 | - | 12,084,776 | - | 131,305 | - | - | - | 18,256,742 |
7 | Exposures to corporates | - | - | 479,188 | - | 5,000,778 | - | 103,083,877 | - | - | - | 108,563,843 |
8 | Retail exposures | - | - | 630 | - | 2,307 | 62,345,985 | - | - | - | - | 62,348,922 |
9 | Exposures secured by residential property | - | - | - | 18,645,667 | - | - | - | - | - | - | 18,645,667 |
10 | Exposures secured by commercial property | - | - | - | - | 12,459,341 | - | 4,824,480 | - | - | - | 17,283,821 |
11 | Past-due items | - | - | - | - | 216,697 | - | 488,445 | - | - | - | 705,142 |
12 | Exposures in high-risk categories | - | - | - | - | 19,031 | - | 19,577 | 320,121 | - | - | 358,729 |
13 | Exposures in the form of bonds secured by mortgages | - | - | - | - | - | - | - | - | - | - | - |
14 | Short term exposures to banks, brokerage houses and corporates | - | - | - | - | - | - | - | - | - | - | - |
15 | Exposures in the form of collective investment undertakings | - | - | - | - | - | - | - | - | - | - | - |
16 | Equity share investments | 37,057 | - | - | - | - | - | 5,229,197 | - | - | - | 5,266,254 |
17 | Other exposures | 2,916,168 | - | 2,444 | - | - | - | 6,125,457 | - | - | - | 9,044,069 |
18 | Total | 38,268,536 | - | 6,667,304 | 18,645,667 | 53,964,845 | 62,345,985 | 119,950,984 | 320,121 | - | - | 300,163,442 |
4.10.4 Counterparty credit risk
4.10.4.1 Qualitative disclosure on counterparty credit risk
Counterparty credit risk management policies include evaluating and monitoring risk developments, taking necessary measures, setting risk limits, ensuring that the risks remain within the limits, and establishing required reporting, control and audit mechanisms by using the methods aligned with both international standards and local regulations. The policies regarding counterparty credit risk measurement, monitoring, and limit settings are defined by the board of directors.
Counterparty credit risk arising from derivative transactions is periodically being monitored and reported by the Market Risk and Credit Risk Control units on product, country, counterparty and counterparty type basis.
International framework agreements (ISDA, CSA, GMRA, etc.) are being used through collateral and margin call mechanisms in order to mitigate the counterparty credit risk.
4.10.4.2 Counterparty credit risk (CCR) approach analysis
| | Replacement cost | Potential future exposure | EEPE(Effective Expected Positive Exposure) | Alpha used for computing regulatory EAD | EAD post-CRM | RWA |
1 | Standardised Approach -CCR (for derivatives) | 3,972,361 | 1,639,214 | | - | 5,601,824 | 2,911,950 |
2 | Internal Model Method (for repo transactions, securities or commodity lending or borrowing transactions, long settlement transactions and securities financing transactions) | | | - | - | - | - |
3 | Simple Approach for credit risk mitigation (for repo transactions, securities or commodity lending or borrowing transactions, long settlement transactions and securities financing transactions) | | | | | - | - |
4 | Comprehensive Approach for credit risk mitigation (for repo transactions, securities or commodity lending or borrowing transactions, long settlement transactions and securities financing transactions) | | | | | 1,765,439 | 552,309 |
5 | Value-at-Risk (VaR) for repo transactions, securities or commodity lending or borrowing transactions, long settlement transactions and securities financing transactions | | | | | - | - |
6 | Total | | | | | | 3,464,259 |
4.10.4.3 Capital requirement for credit valuation adjustment (CVA)
| |
EAD post-CRM | RWA |
| Total portfolios subject to the Advanced CVA capital obligation | - | - |
1 | (i) VaR component (including the 3×multiplier) | | - |
2 | (ii) Stressed VaR component (including the 3×multiplier) | | - |
3 | All portfolios subject to the Standardised CVA capital obligation | 5,601,824 | 1,806,311 |
4 | Total subject to the CVA capital obligation | 5,601,824 | 1,806,311 |
4.10.4.4 CCR exposures by risk class and risk weights
Risk weight
Regulatory portfolio | 0% | 10% | 20% | 50% | 75% | 100% | 150% | Other | Total credit exposure |
Exposures to sovereigns and their central banks | 90,039 | - | - | - | - | - | - | - | 90,039 |
Exposures to regional and local governments | - | - | - | - | - | - | - | - | - |
Exposures to administrative bodies and non-commercial entities | - | - | - | - | - | 4 | - | - | 4 |
Exposures to multilateral development banks | 413,953 | - | - | - | - | - | - | - | 413,954 |
Exposures to international organizations | - | - | - | - | - | - | - | - | - |
Exposures to banks and brokerage houses | - | - | 1,033,639 | 5,082,247 | - | - | - | - | 6,115,886 |
Exposures to corporates | - | - | 546 | 37,511 | 4 | 662,183 | - | - | 700,243 |
Retail exposures | - | - | - | - | 47,137 | - | - | - | 47,137 |
Exposures secured by mortgage property | - | - | - | - | - | - | - | - | - |
Exposures secured by commercial property | - | - | - | - | - | - | - | - | - |
Past-due items | - | - | - | - | - | - | - | - | - |
Exposures in high-risk categories | - | - | - | - | - | - | - | - | - |
Exposures in the form of bonds secured by mortgages | - | - | - | - | - | - | - | - | - |
Securitization positions | - | - | - | - | - | - | - | - | - |
Short term exposures to banks, brokerage houses and corporates | - | - | - | - | - | - | - | - | - |
Exposures in the form of collective investment undertakings | - | - | - | - | - | - | - | - | - |
Equity share investments | - | - | - | - | - | - | - | - | - |
Other exposures | - | - | - | - | - | - | - | - | - |
Other assets | - | - | - | - | - | - | - | - | - |
Total | 503,992 | - | 1,034,185 | 5,119,758 | 47,141 | 662,187 | - | - | 7,367,263 |
4.10.4.5 Collaterals for CCR
| Collateral for derivative transactions | Collateral for other transactions | ||||
| Fair value of collateral received |
Fair value of collateral given | Fair value of collateral received | Fair value of collateral given | ||
| Segregated | Unsegregated | Segregated | Unsegregated | ||
Cash-domestic currency | 4,944 | - | - | - | 8,257,240 | - |
Cash-foreign currency | 4,807 | - | - | - | 4,804,917 | - |
Domestic sovereign debts | - | - | - | - | - | 13,323,129 |
Other sovereign debts | - | - | - | - | - | - |
Government agency debts | - | - | - | - | - | - |
Corporate debts | - | - | - | - | - | - |
Equity securities | - | - | - | - | - | - |
Other collateral | - | - | - | - | - | - |
Total | 9,751 | - | - | - | 13,062,157 | 13,323,129 |
4.10.4.6 Credit derivatives
| Protection bought | Protection sold |
Notionals | | |
Single-name credit default swaps | 87,825 | - |
Index credit default swaps | - | - |
Total return swaps | - | 7,026,000 |
Credit options | - | - |
Other credit derivatives | - | - |
Total Notionals | 87,825 | 7,026,000 |
Fair Values | | |
Positive fair values (asset) | 215 | 6,677 |
Negative fair values (liability) | - | (401,821) |
4.10.5 Securitisations
None.
4.10.6 Market risk
4.10.6.1 Qualitative disclosure on market risk
Market risk is managed in accordance with the strategies and policies defined by the Bank. The Bank takes economic climate, market and liquidity conditions and their effects on market risk, the structure of portfolio subject to market risk, the sufficiency of the Bank's definition, measurement, evaluation, monitoring, reporting, control and mitigation of market risk and the availability of the related processes into account while defining the Strategy. Market risk strategies and policies are reviewed by the board of directors and related top management by considering financial performance, capital required for market risk, and the existing market developments. Market risk for internal use, implementation fundamentals and procedures are being developed on bank-only and consolidated level in consideration of the size and complexity of the operations.
Market risk is managed through measuring the risks in parallel with the international standards, setting the limits, capital reserving and additionally through mitigating via hedging transactions.
Market Risk Function under Market Risk and Credit Risk Control Department monitors the activities of Treasury Department via risk reports and the limits approved by the Board of Directors.
Market Risk, which is defined as the risk arising from the price fluctuations in balance sheet and off-balance sheet trading positions, is being calculated and reported daily via Value at Risk (VaR) Model.
4.10.6.2 Market risk under standardised approach
|
| RWA | |
| | Current Period | Prior Period |
| Outright products | 5,266,724 | 3,821,248 |
1 | Interest rate risk (general and specific) | 1,718,225 | 1,343,063 |
2 | Equity risk (general and specific) | 42,274 | 90,950 |
3 | Foreign exchange risk | 3,067,938 | 2,368,775 |
4 | Commodity risk | 438,287 | 18,460 |
| Options | 437,400 | 2,457,913 |
5 | Simplified approach | - | - |
6 | Delta-plus method | 437,400 | 2,457,913 |
7 | Scenario approach | - | - |
8 | Securitisation | - | - |
9 | Total | 5,704,124 | 6,279,160 |
4.10.7 Operational risk
The value at operational risk is calculated according to the basic indicator approach as per the Article 14 of "Regulation regarding Measurement and Assessment of Capital Adequacy Ratios of Banks".
The annual gross income is composed of net interest income and net non-interest income after deducting realised gains/losses from the sale of securities available-for-sale and held-to-maturity, extraordinary income and income derived from insurance claims at year-end.
Basic Indicator Approach Current Period | 31 December 2013 | 31 December 2014 | 31 December 2015 | Total/ No. of Years of Positive Gross Income | Rate (%) | Total |
Gross Income | 9,180,910 | 10,054,838 | 11,052,683 | 10,096,144 | 15 | 1,514,422 |
Value at Operational Risk (Total x % 12.5) | | | | | | 18,930,270 |
Basic Indicator Approach Priod Period | 31 December 2012 | 31 December 2013 | 31 December 2014 | Total/ No. of Years of Positive Gross Income | Rate (%) | Total |
Gross Income | 7,814,126 | 9,180,910 | 10,054,838 | 9,016,625 | 15 | 1,352,494 |
Value at Operational Risk (Total x % 12.5) | | | | | | 16,906,172 |
4.10.8 Banking book interest rate risk
4.10.8.1 Nature of interest rate risk resulting from banking book, major assumptions on early repayment of loans and movements in deposits other than term deposits and frequency of measuring interest rate risk
The interest rate risk resulting from the banking book is assessed in terms of repricing risk, yield-curve risk, base risk and option risk, measured as per international standards and managed through limitations and mitigations through hedging transactions.
The interest sensitivity of assets, liabilities and off balance-sheet items are evaluated at the Weekly Review Committee and Monthly Asset-Liability meetings considering also the market developments.
The measurement process of interest rate risk resulting from the banking book, is designed and managed by the Bank on a bank-only basis to include the interest rate positions defined as banking book by the Bank and to consider the relevant repricing and maturity data.
Within the scope of monitoring the re-pricing risk arising from maturity mismatch, the sensitivity of the durations/gap, economic value, economic capital, net interest income, earnings at risk, market price of securities portfolio are measured and the internal early warning and limit levels in this context are monitored and reported regularly. Calculated risk metrics and generated reports are used in the management
of the balance sheet interest risk under the supervision of the Asset and Liability Committee. In the said analyses, the present value and the net interest income are calculated over the cash flows of the sensitive assets and liability items by using the yield curves constructed by using the market interest rates. For non-matured products, maturity is determined based on interest rate determination frequency and customer behaviour. These results are supported by periodic sensitivities and scenario analyses against fluctuations that may be experienced in the markets.
The interest rate risk resulting from the banking book is measured legally as per the "Regulation on Measurement and Evaluation of Interest Rate Risk Resulting from Banking Book as per Standard Shock Method" published in the Official Gazette no.28034 dated 23 August 2011, and the legal limit as per this measurement is monitored and reported monthly. The capital level is maintained considering the interest rate risk resulting from the banking book.
The interest rate risk on the interest-rate-sensitive financial instruments of the trading portfolio is evaluated as part of the market risk.
Branches and lines of business are eliminated from interest rate risk through the transfer pricing system and these risks are transferred to the Asset and Liability Management Department (ALM) and managed by ALM in a central structure.
4.10.8.2 Economic value differences resulted from interest rate instabilities calculated according to Regulation on Measurement and Evaluation of Interest Rate Risk Resulted from Banking Book as per Standard Shock Method
| Current Period | Shocks Applied (+/- basis points) | Gains/Losses | Gains/Equity-Losses/Equity |
Type of Currency | ||||
1 | TL | (+) 500bp | (4,209,703) | (11.18)% |
2 | TL | (-) 400bp | 4,052,171 | 10.76% |
3 | USD | (+) 200bp | (810,330) | (2.15)% |
4 | USD | (-) 200bp | 1,055,840 | 2.80% |
5 | EUR | (+) 200bp | (14,342) | (0.04)% |
6 | EUR | (-) 200bp | (44,364) | (0.12)% |
| Total (of negative shocks) | | 5,063,647 | 13.44% |
| Total (of positive shocks) | | (5,034,375) | (13.37)% |
| Prior Period | Shocks Applied (+/- basis points) | Gains/Losses | Gains/Equity-Losses/Equity |
Type of Currency | ||||
1 | TL | (+) 500 bps | (3,581,363) | (10.83)% |
2 | TL | (-) 400 bps | 3,477,727 | 10.51% |
3 | USD | (+) 200 bps | (766,486) | (2.32)% |
4 | USD | (-) 200 bps | 1,031,044 | 3.12% |
5 | EUR | (+) 200 bps | (52,426) | (0.16)% |
6 | EUR | (-) 200 bps | 50,223 | 0.15% |
| Total (of negative shocks) | | 4,558,994 | 13.78% |
| Total (of positive shocks) | | (4,400,275) | (13.30)% |
4.10.9 Remuneration policy
4.10.9.1 Qualitative disclosures regarding remuneration policies
4.10.9.1.1 Disclosures related with Remuneration Committee
The Bank's Remuneration Committee is comprised of two non-executive directors. The committee has convened for once during the year. The duties and responsibilities of the Committee include the following:
· To conduct the necessary monitoring and audit process in order to ensure that the remuneration policy and practices are implemented in accordance with the related laws and regulations and risk management principles;
· To review and if necessary, revise the remuneration policy at least once a year in order to ensure its compliance with the laws and regulations or market practices in Turkey;
· To determine and approve remuneration packages of the executive and non-executive Board of Directors, Chief Executive Officer and Executive Vice Presidents;
· To follow up the revision requirements of the policies, procedures and regulations related with its areas of responsibility and to take actions in order to ensure that they are kept updated.
The Bank has received consultancy service from Willis Towers Watsons company within the framework of the activities for compliance with the Guidelines on Sound Remuneration Practices in Banks.
The fundamental principles of the remuneration policy are applicable for all bank employees.
The bank board members, senior management and the bank staff deemed to perform the functions having material impact on the bank's risk profile are considered as identified staff; and by the end of 2016, the number of identified staff is 29.
4.10.9.1.2 Information on the design and structure of remuneration process
The Bank relies on the following values while managing its Remuneration Policy. These values are considered in all compensation practices.
a. Fair
b. Transparent
c. Based on measurable and balanced performance targets
d. Encouraging sustainable success
e. In line with the Bank Risk Management Principles
The main objective of the Remuneration Policy is to maintain the internal and external balances in the remuneration structure. Internal balance is ensured with the principles of "equal pay for equal work" and performance-based remuneration". As for external balance, the data obtained from employee reward and benefit researches conducted by independent research organizations are taken into account.
In the meeting dated 14 December 2016, the Remuneration Committee evaluated its decisions previously taken with respect to remuneration of the senior managers and members of the board of directors considering the provisions of the Guidelines on Sound Remuneration Practices in Banks.
Increases in the remuneration of employees working in the units responsible for internal systems are determined depending on the basic rate of increase specified by the Bank and their personal performances. In the variable remuneration, only the performance criteria associated with their personal performance or the performance of the unit that they work in are taken into account independently of the performance of the business units that they control.
4.10.9.1.3 Evaluation about how the bank's remuneration processes take the current and future risks into account
The Bank follows the Risk Management Principles while implementing the remuneration processes. It adopts the remuneration policies that are in line with Bank's long-term objectives and risk management structures and avoiding excessive risk-taking.
4.10.9.1.4 Evaluation about how the Bank associates variable remunerations with performance
In the association of variable remunerations with performance, various indicators considered among financial and non-financial performance criteria specified by the Bank such as return on regulatory capital, efficiency, profitability, customer satisfaction (NTS), digital sales are taken into account.
In the variable remuneration for the identified staff, personal performance criteria, the Bank's performance criteria and BBVA Group's performance criteria are collectively taken into account. The weightings of such performances taken into account as such may vary according to the position of the identified staff member.
In case of occurrence of risky situations regarding capital adequacy or if and when necessary, Bank may pursue a more conservative policy in relation to all remuneration issues, particularly regarding variable remunerations. In this context, methodological changes such as deferral, retention, malus and clawback may be applied in relation to variable remunerations in accordance with the principles set out by the applicable laws.
4.10.9.1.5 Evaluation about the bank's methods to adjust remunerations according to long-term performance
Regarding variable remunerations of identified staff, it has been adopted based on the principles in the "Guidelines on Sound Remuneration Practices in Banks" that 40% of variable remunerations will be deferred for at least 3 years and at least 50% of it will be paid in non-cash instruments.
The same rules apply for the ratios of deferral for all identified staff members regarding their variable remunerations. Remuneration Committee decided on that variable remuneration of identified staff is subject to cancellation and clawback.
4.10.9.1.6 Evaluation about the instruments used by the bank for variable remunerations and the purposes of use of such instruments
The variable remunerations of identified staff are paid using cash and share-linked non-cash instruments. Considering the principles in the "Guidelines on Sound Remuneration Practices in Banks" variable remunerations of identified staff are paid both with cash and non-cash(share-linked) instruments. Regarding variable remunerations of identified staff for the financial period of 2016, Banco Bilbao Vizcaya Argentaria S.A. shares are taken as referance for payments based on non-cash instruments.
The type and weight of non-cash instruments used in payment of variable remuneration are same for all identified staff.
5 Disclosures and Footnotes on Unconsolidated Financial Statements
5.1 Assets
5.1.1 Cash and balances with Central Bank
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Cash in TL/Foreign Currency | 1,357,688 | 681,875 | 1,313,068 | 750,950 |
Central Bank of Turkey | 5,366,015 | 15,500,506 | 946,596 | 21,896,042 |
Others | - | 879,050 | - | 244,867 |
Total | 6,723,703 | 17,061,431 | 2,259,664 | 22,891,859 |
Balances with the Central Bank of Turkey
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Unrestricted Demand Deposits | 5,366,015 | 155 | 946,596 | 1,556,782 |
Unrestricted Time Deposits | - | 38 | - | 5 |
Restricted Time Deposits | - | 15,500,313 | - | 20,339,255 |
Total | 5,366,015 | 15,500,506 | 946,596 | 21,896,042 |
The reserve deposits kept as per the Communique no. 2005/1 "Reserve Deposits" of the Central Bank of Turkey in Turkish Lira, foreign currencies and gold, are included in the table above.
5.1.2 Information on financial assets at fair value through profit/loss
5.1.2.1 Financial assets at fair value through profit/loss subject to repurchase agreements and provided as collateral/blocked
None.
5.1.2.2 Positive differences on derivative financial assets held for trading
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Forward Transactions | 257,212 | 38,001 | 243,525 | 41,894 |
Swap Transactions | 1,936,417 | 702,752 | 363,131 | 324,633 |
Futures | - | 1,097 | - | 34 |
Options | 426,694 | 28,812 | 442,320 | 67,952 |
Other | - | - | - | - |
Total | 2,620,323 | 770,662 | 1,048,976 | 434,513 |
5.1.2.3 Financial assets at fair value through profit/loss
None.
5.1.3 Banks
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Banks | | | | |
Domestic banks | 55,714 | 746 | 231,280 | 247,879 |
Foreign banks | 390,940 | 11,871,526 | 44,855 | 11,323,481 |
Foreign headoffices and branches | - | - | - | - |
Total | 446,654 | 11,872,272 | 276,135 | 11,571,360 |
Due from foreign banks
| Unrestricted Balances | Restricted Balances | ||
Current Period | Prior Period | Current Period | Prior Period | |
EU Countries | 4,263,606 | 2,833,374 | 6,943,130 | 6,988,096 |
USA and Canada | 269,751 | 907,844 | 400,420 | 291,511 |
OECD Countries (*) | 6,529 | 4,210 | - | - |
Off-Shore Banking Regions | 248,595 | 220,152 | 96,147 | 65,059 |
Other | 34,288 | 58,090 | - | - |
Total | 4,822,769 | 4,023,670 | 7,439,697 | 7,344,666 |
(*) OECD countries other than the EU countries, USA and Canada
The placements at foreign banks include blocked accounts amounting TL 7,439,697 thousands (31 December 2015: TL 7,344,666 thousands) of which TL 116,841 thousands (31 December 2015: TL 96,799 thousands) and TL 96,147 thousands (31 December 2015: TL 65,058 thousands) are kept at the central banks of Malta and Turkish Republic of Northern Cyprus, respectively as reserve deposits and TL 7,226,709 thousands (31 December 2015: TL 7,182,809 thousands) as collateral against funds borrowed at various banks.
5.1.4 Financial assets available-for-sale
5.1.4.1 Financial assets subject to repurchase agreements and provided as collateral/blocked
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Collateralised/Blocked Assets | 2,976,848 | - | 2,170,335 | - |
Assets subject to Repurchase Agreements | 4,306,605 | - | 10,879,108 | 1,449 |
Total | 7,283,453 | - | 13,049,443 | 1,449 |
5.1.4.2 Details of financial assets available-for-sale
| Current Period | Prior Period |
Debt Securities | 18,572,775 | 19,301,827 |
Quoted at Stock Exchange | 18,035,819 | 18,699,925 |
Unquoted at Stock Exchange | 536,956 | 601,902 |
Common Shares/Investment Funds | 155,150 | 69,704 |
Quoted at Stock Exchange (*) | 82,203 | 7,669 |
Unquoted at Stock Exchange | 72,947 | 62,035 |
Value Increases/Impairment Losses (-) | 1,184,644 | 1,148,270 |
Total | 19,912,569 | 20,519,801 |
5.1.5 Loans
5.1.5.1 Loans and advances to shareholders and employees of the Bank
| Current Period | Prior Period | ||
Cash Loans | Non-Cash Loans | Cash Loans | Non-Cash Loans | |
Direct Lendings to Shareholders | - | 166,331 | 146 | 408,529 |
Corporates | - | 166,331 | 146 | 408,529 |
Individuals | - | - | - | - |
Indirect Lendings to Shareholders | 2,121,617 | 474,103 | 2,043,036 | 263,954 |
Loans to Employees | 222,026 | 101 | 185,470 | 88 |
Total | 2,343,643 | 640,535 | 2,228,652 | 672,571 |
5.1.5.2 Loans and other receivables classified in groups I and II including contracts with revised terms
Current Period | Performing Loans and Other Receivables | Loans and Other Receivables under Follow-Up | ||||
| Loans and Other Receivables (Total) (*) | Loans and Receivables with Revised Contract Terms | Loans and Other Receivables (Total) | Loans and Receivables with Revised Contract Terms | ||
Cash Loans | Extension of Repayment Plan | Other Changes | Extension of Repayment Plan | Other Changes | ||
Loans | 175,775,487 | 3,571,299 | 428,047 | 9,267,458 | 4,128,388 | 718,164 |
Working Capital Loans | 21,388,726 | 475,748 | - | 1,165,695 | 512,795 | 175,499 |
Export Loans | 8,998,517 | 136,762 | - | 254,813 | 109,642 | 23,312 |
Import Loans | 241 | - | - | - | - | - |
Loans to Financial Sector | 4,913,881 | 318 | - | 48 | - | - |
Consumer Loans | 40,856,208 | 2,333,953 | - | 1,919,430 | 647,127 | 55,300 |
Credit Cards | 18,332,885 | - | 428,047 | 521,527 | - | 280,601 |
Others | 81,285,029 | 624,518 | - | 5,405,945 | 2,858,824 | 183,452 |
Specialization Loans | - | - | - | - | - | - |
Other Receivables | - | - | - | - | - | - |
Total | 175,775,487 | 3,571,299 | 428,047 | 9,267,458 | 4,128,388 | 718,164 |
(*) The loan granted to the shareholder of a strategically important company operating in the telecommunication sector amounting to USD 951,407,360.63 is classified under "Performing Loans and Other Receivables". Discusssions between the shareholders of the company, creditor banks and related sovereign institutions have started regarding restructuring of loans granted including a possible change in shareholder structure, and a positive outcome of these discussions is expected.
As of 31 December 2016, loans amounting to TL 5,269,501 thousands (31 December 2015: TL 5,781,904 thousands) are benefited as collateral under funding transactions.
Prior Period | Performing Loans and Other Receivables | Loans and Other Receivables under Follow-Up | ||||
| Loans and Other Receivables (Total) | Loans and Receivables with Revised Contract Terms | Loans and Other Receivables (Total) | Loans and Receivables with Revised Contract Terms | ||
Cash Loans | Extension of Repayment Plan | Other Changes | Extension of Repayment Plan | Other Changes | ||
Loans | 150,695,419 | 2,179,145 | 233,976 | 7,806,295 | 3,228,253 | 622,963 |
Working Capital Loans | 14,870,509 | 175,956 | - | 915,921 | 358,070 | 85,796 |
Export Loans | 6,399,197 | 8,136 | - | 143,651 | 67,004 | 35,188 |
Import Loans | 15,160 | - | - | - | - | - |
Loans to Financial Sector (*) | 5,160,937 | - | - | - | - | - |
Consumer Loans | 35,883,920 | 1,627,563 | - | 1,729,724 | 623,376 | 47,914 |
Credit Cards | 16,364,078 | - | 233,976 | 589,131 | - | 406,106 |
Others | 72,001,618 | 367,490 | - | 4,427,868 | 2,179,803 | 47,959 |
Specialization Loans | - | - | - | - | - | - |
Other Receivables | - | - | - | - | - | - |
Total | 150,695,419 | 2,179,145 | 233,976 | 7,806,295 | 3,228,253 | 622,963 |
(*) Loans amounting to TL 198,118 thousands included under "financial assets at fair value through profit or loss" in the accompanying balance sheet, are presented above under "Loans to Financial Sector".
Collaterals received for loans under follow-up;
Current Period | Corporate/ Commercial Loans | Consumer Loans | Credit Cards | Total |
Loans Collateralized by Cash | 47,618 | 4,620 | - | 52,238 |
Loans Collateralized by Mortgages | 3,995,662 | 974,409 | - | 4,970,071 |
Loans Collateralized by Pledged Assets | 1,006,009 | 69,944 | - | 1,075,953 |
Loans Collateralized by Cheques and Notes | 12,488 | 560,040 | - | 572,528 |
Loans Collateralized by Other Collaterals | 1,370,667 | 9,058 | - | 1,379,725 |
Unsecured Loans | 394,057 | 301,359 | 521,527 | 1,216,943 |
Total | 6,826,501 | 1,919,430 | 521,527 | 9,267,458 |
Prior Period | Corporate/ Commercial Loans | Consumer Loans | Credit Cards | Total |
Loans Collateralized by Cash | 17,538 | 2,356 | - | 19,894 |
Loans Collateralized by Mortgages | 2,863,460 | 690,628 | - | 3,554,088 |
Loans Collateralized by Pledged Assets | 763,943 | 59,786 | - | 823,729 |
Loans Collateralized by Cheques and Notes | 86,223 | 574,200 | - | 660,423 |
Loans Collateralized by Other Collaterals | 1,404,793 | 10,353 | - | 1,415,146 |
Unsecured Loans | 351,483 | 392,401 | 589,131 | 1,333,015 |
Total | 5,487,440 | 1,729,724 | 589,131 | 7,806,295 |
Delinquency periods of loans under follow-up;
Current Period | Corporate/ Commercial Loans | Consumer Loans | Credit Cards | Total |
31-60 days | 174,568 | 740,357 | 194,622 | 1,109,547 |
61-90 days | 153,267 | 261,027 | 56,740 | 471,034 |
Others | 6,498,666 | 918,046 | 270,165 | 7,686,877 |
Total | 6,826,501 | 1,919,430 | 521,527 | 9,267,458 |
Prior Period | Corporate/ Commercial Loans | Consumer Loans | Credit Cards | Total |
31-60 days | 180,970 | 633,756 | 152,905 | 967,631 |
61-90 days | 45,445 | 202,495 | 45,596 | 293,536 |
Others | 5,261,025 | 893,473 | 390,630 | 6,545,128 |
Total | 5,487,440 | 1,729,724 | 589,131 | 7,806,295 |
Loans and other receivables with extended payment plans;
| Current Period | Prior Period | ||
No. of Extensions | Performing Loans and Other Receivables | Loans and Other Receivables under Follow-up | Performing Loans and Other Receivables | Loans and Other Receivables under Follow-up |
1 or 2 times | 3,247,551 | 4,038,596 | 1,979,491 | 2,929,711 |
3, 4 or 5 times | 106,419 | 78,645 | 111,249 | 282,660 |
Over 5 times | 217,329 | 11,147 | 88,405 | 15,882 |
| Current Period | Prior Period | ||
Extention Periods | Performing Loans and Other Receivables | Loans and Other Receivables under Follow-up | Performing Loans and Other Receivables | Loans and Other Receivables under Follow-up |
0-6 months | 341,505 | 702,729 | 336,391 | 566,273 |
6-12 months | 442,811 | 182,553 | 367,841 | 149,516 |
1-2 years | 1,406,109 | 302,040 | 893,626 | 393,138 |
2-5 year | 1,219,866 | 1,753,567 | 518,336 | 1,595,092 |
5 years and over | 161,008 | 1,187,499 | 62,951 | 524,234 |
5.1.5.3 Maturity analysis of cash loans
Current Period | Performing Loans and Other Receivables | Loans under Follow-Up and Other Receivables | ||
Loans and Other Receivables | Loans and Receivables with Revised Contract Terms | Loans and Other Receivables | Loans and Receivables with Revised Contract Terms | |
Short-term Loans | 51,681,248 | 683,937 | 1,299,908 | 492,861 |
Loans | 51,681,248 | 683,937 | 1,299,908 | 492,861 |
Specialization Loans | - | - | - | - |
Other Receivables | - | - | - | - |
Medium and Long-term Loans | 124,094,239 | 3,315,409 | 7,967,550 | 4,353,691 |
Loans | 124,094,239 | 3,315,409 | 7,967,550 | 4,353,691 |
Specialization Loans | - | - | - | - |
Other Receivables | - | - | - | - |
Prior Period | Performing Loans and Other Receivables | Loans under Follow-Up and Other Receivables | ||
Loans and Other Receivables | Loans and Receivables with Revised Contract Terms | Loans and Other Receivables | Loans and Receivables with Revised Contract Terms | |
Short-term Loans | 44,408,008 | 508,040 | 1,110,993 | 601,823 |
Loans | 44,408,008 | 508,040 | 1,110,993 | 601,823 |
Specialization Loans | - | - | - | - |
Other Receivables | - | - | - | - |
Medium and Long-term Loans | 106,287,411 | 1,905,081 | 6,695,302 | 3,249,393 |
Loans | 106,287,411 | 1,905,081 | 6,695,302 | 3,249,393 |
Specialization Loans | - | - | - | - |
Other Receivables | - | - | - | - |
5.1.5.4 Consumer loans, retail credit cards, personnel loans and personnel credit cards
Current Period | Short-Term | Medium and Long-Term | Total |
Consumer Loans - TL | 745,039 | 41,174,705 | 41,919,744 |
Housing Loans | 29,927 | 21,414,214 | 21,444,141 |
Automobile Loans | 66,063 | 2,133,790 | 2,199,853 |
General Purpose Loans | 649,049 | 17,626,701 | 18,275,750 |
Other | - | - | - |
Consumer Loans - FC-indexed | 188 | 172,014 | 172,202 |
Housing Loans | 188 | 171,585 | 171,773 |
Automobile Loans | - | 2 | 2 |
General Purpose Loans | - | 427 | 427 |
Other | - | - | - |
Consumer Loans - FC | 141 | 46,333 | 46,474 |
Housing Loans | - | 26,918 | 26,918 |
Automobile Loans | 112 | 12,136 | 12,248 |
General Purpose Loans | 29 | 7,279 | 7,308 |
Other | - | - | - |
Retail Credit Cards - TL | 15,172,949 | 775,677 | 15,948,626 |
With Installment | 7,403,316 | 775,677 | 8,178,993 |
Without Installment | 7,769,633 | - | 7,769,633 |
Retail Credit Cards - FC | 45,286 | - | 45,286 |
With Installment | 16 | - | 16 |
Without Installment | 45,270 | - | 45,270 |
Personnel Loans - TL | 21,508 | 91,980 | 113,488 |
Housing Loan | - | 1,165 | 1,165 |
Automobile Loans | - | 90 | 90 |
General Purpose Loans | 21,508 | 90,725 | 112,233 |
Other | - | - | - |
Personnel Loans - FC-indexed | - | 378 | 378 |
Housing Loans | - | 378 | 378 |
Automobile Loans | - | - | - |
General Purpose Loans | - | - | - |
Other | - | - | - |
Personnel Loans - FC | - | 163 | 163 |
Housing Loans | - | - | - |
Automobile Loans | - | - | - |
General Purpose Loans | - | 163 | 163 |
Other | - | - | - |
Personnel Credit Cards - TL | 106,354 | 1,060 | 107,414 |
With Installment | 43,217 | 1,060 | 44,277 |
Without Installment | 63,137 | - | 63,137 |
Personnel Credit Cards - FC | 583 | - | 583 |
With Installment | - | - | - |
Without Installment | 583 | - | 583 |
Deposit Accounts- TL (Real persons) | 523,189 | - | 523,189 |
Deposit Accounts- FC (Real persons) | - | - | - |
Total | 16,615,237 | 42,262,310 | 58,877,547 |
Prior Period | Short-Term | Medium and Long-Term | Total |
Consumer Loans - TL | 686,400 | 36,127,573 | 36,813,973 |
Housing Loans | 25,062 | 18,582,778 | 18,607,840 |
Automobile Loans | 37,616 | 1,522,036 | 1,559,652 |
General Purpose Loans | 623,722 | 16,022,759 | 16,646,481 |
Other | - | - | - |
Consumer Loans - FC-indexed | - | 170,849 | 170,849 |
Housing Loans | - | 168,194 | 168,194 |
Automobile Loans | - | 2 | 2 |
General Purpose Loans | - | 2,653 | 2,653 |
Other | - | - | - |
Consumer Loans - FC | 3 | 40,033 | 40,036 |
Housing Loans | - | 25,999 | 25,999 |
Automobile Loans | - | 7,504 | 7,504 |
General Purpose Loans | 3 | 6,530 | 6,533 |
Other | - | - | - |
Retail Credit Cards - TL | 14,279,715 | 566,447 | 14,846,162 |
With Installment | 6,850,008 | 566,447 | 7,416,455 |
Without Installment | 7,429,707 | - | 7,429,707 |
Retail Credit Cards - FC | 38,371 | - | 38,371 |
With Installment | 2,685 | - | 2,685 |
Without Installment | 35,686 | - | 35,686 |
Personnel Loans - TL | 17,241 | 74,439 | 91,680 |
Housing Loan | - | 1,055 | 1,055 |
Automobile Loans | - | 86 | 86 |
General Purpose Loans | 17,241 | 73,298 | 90,539 |
Other | - | - | - |
Personnel Loans - FC-indexed | - | 330 | 330 |
Housing Loans | - | 330 | 330 |
Automobile Loans | - | - | - |
General Purpose Loans | - | - | - |
Other | - | - | - |
Personnel Loans - FC | - | 112 | 112 |
Housing Loans | - | - | - |
Automobile Loans | - | - | - |
General Purpose Loans | - | 112 | 112 |
Other | - | - | - |
Personnel Credit Cards - TL | 92,376 | 460 | 92,836 |
With Installment | 37,692 | 460 | 38,152 |
Without Installment | 54,684 | - | 54,684 |
Personnel Credit Cards - FC | 512 | - | 512 |
With Installment | 86 | - | 86 |
Without Installment | 426 | - | 426 |
Deposit Accounts- TL (Real persons) | 496,664 | - | 496,664 |
Deposit Accounts- FC (Real persons) | - | - | - |
Total | 15,611,282 | 36,980,243 | 52,591,525 |
5.1.5.5 Installment based commercial loans and corporate credit cards
Current Period | Short-Term | Medium and Long-Term | Total |
Installment-based Commercial Loans - TL | 1,767,307 | 11,094,610 | 12,861,917 |
Real Estate Loans | 3,262 | 831,376 | 834,638 |
Automobile Loans | 107,647 | 2,174,041 | 2,281,688 |
General Purpose Loans | 1,656,398 | 8,089,193 | 9,745,591 |
Other | - | - | - |
Installment-based Commercial Loans - FC-indexed | 264,798 | 2,405,434 | 2,670,232 |
Real Estate Loans | - | 72,529 | 72,529 |
Automobile Loans | 8,927 | 730,518 | 739,445 |
General Purpose Loans | 255,871 | 1,602,387 | 1,858,258 |
Other | - | - | - |
Installment-based Commercial Loans - FC | 710 | 86,457 | 87,167 |
Real Estate Loans | - | 637 | 637 |
Automobile Loans | 42 | 14,356 | 14,398 |
General Purpose Loans | 668 | 71,464 | 72,132 |
Other | - | - | - |
Corporate Credit Cards - TL | 2,687,757 | 53,475 | 2,741,232 |
With Installment | 1,279,033 | 53,475 | 1,332,508 |
Without Installment | 1,408,724 | - | 1,408,724 |
Corporate Credit Cards - FC | 11,271 | - | 11,271 |
With Installment | 176 | - | 176 |
Without Installment | 11,095 | - | 11,095 |
Deposit Accounts- TL (Corporates) | 881,614 | - | 881,614 |
Deposit Accounts- FC (Corporates) | - | - | - |
Total | 5,613,457 | 13,639,976 | 19,253,433 |
Prior Period | Short-Term | Medium and Long-Term | Total |
Installment-based Commercial Loans - TL | 1,335,639 | 9,681,444 | 11,017,083 |
Real Estate Loans | 3,237 | 725,187 | 728,424 |
Automobile Loans | 88,500 | 1,968,503 | 2,057,003 |
General Purpose Loans | 1,243,902 | 6,987,754 | 8,231,656 |
Other | - | - | - |
Installment-based Commercial Loans - FC-indexed | 160,480 | 1,885,722 | 2,046,202 |
Real Estate Loans | 369 | 53,546 | 53,915 |
Automobile Loans | 3,355 | 542,030 | 545,385 |
General Purpose Loans | 156,756 | 1,290,146 | 1,446,902 |
Other | - | - | - |
Installment-based Commercial Loans - FC | 160 | 46,675 | 46,835 |
Real Estate Loans | - | 925 | 925 |
Automobile Loans | 84 | 12,304 | 12,388 |
General Purpose Loans | 76 | 33,446 | 33,522 |
Other | - | - | - |
Corporate Credit Cards - TL | 1,963,886 | 3,750 | 1,967,636 |
With Installment | 953,402 | 3,750 | 957,152 |
Without Installment | 1,010,484 | - | 1,010,484 |
Corporate Credit Cards - FC | 7,692 | - | 7,692 |
With Installment | 61 | - | 61 |
Without Installment | 7,631 | - | 7,631 |
Deposit Accounts- TL (corporates) | 831,746 | - | 831,746 |
Deposit Accounts- FC (corporates) | - | - | - |
Total | 4,299,603 | 11,617,591 | 15,917,194 |
5.1.5.6 Allocation of loans by customers
| Current Period | Prior Period |
Public Sector | 792,965 | 866,521 |
Private Sector (*) | 184,249,980 | 157,635,193 |
Total | 185,042,945 | 158,501,714 |
(*) As of 31 December 2015, loans amounting to TL 198,118 thousands (31 December 2016: -) included under "Financial Assets at Fair Value through Profit/Loss" in the accompanying balance sheet, are presented above under "Private Sector".
5.1.5.7 Allocation of domestic and foreign loans
| Current Period | Prior Period |
Domestic Loans | 181,422,064 | 156,494,318 |
Foreign Loans (*) | 3,620,881 | 2,007,396 |
Total | 185,042,945 | 158,501,714 |
(*) As of 31 December 2015, loans amounting to TL 198,118 thousands (31 December 2016: -) included under "Financial Assets at Fair Value through Profit/Loss" in the accompanying balance sheet, are presented above under "Foreign Loans".
5.1.5.8 Loans to associates and affiliates
| Current Period | Prior Period |
Direct Lending | 842,967 | 1,089,363 |
Indirect Lending | - | - |
Total | 842,967 | 1,089,363 |
5.1.5.9 Specific provisions for loans
| Current Period | Prior Period |
Substandard Loans and Receivables - Limited Collectibility | 451,816 | 599,750 |
Doubtful Loans and Receivables | 1,126,227 | 579,036 |
Uncollectible Loans and Receivables | 2,689,448 | 2,388,912 |
Total | 4,267,491 | 3,567,698 |
5.1.5.10 Non-performing loans and other receivables (NPLs) (Net)
Non-performing loans and other receivables restructured or rescheduled
| Group III | Group IV | Group V |
Substandard Loans and Receivables | Doubtful Loans and Receivables | Uncollectible Loans and Receivables | |
Current Period | | | |
(Gross Amounts before Specific Provisions) | 125,617 | 665,093 | 717,588 |
Restructured Loans and Receivables | 125,617 | 665,093 | 717,588 |
Rescheduled Loans and Receivables | - | - | - |
| | | |
Prior Period | | | |
(Gross Amounts before Specific Provisions) | 252,165 | 230,646 | 489,801 |
Restructured Loans and Receivables | 252,165 | 230,646 | 489,801 |
Rescheduled Loans and Receivables | - | - | - |
Movements in non-performing loans and other receivables
Current Period | Group III | Group IV | Group V |
Substandard Loans and Receivables | Doubtful Loans and Receivables | Uncollectible Loans and Receivables | |
Balances at Beginning of Period | 786,183 | 756,847 | 2,860,995 |
Additions during the Period (+) | 3,048,885 | 56,393 | 127,180 |
Transfer from Other NPL Categories (+) | - | 2,781,448 | 1,798,932 |
Transfer to Other NPL Categories (-) | 2,781,448 | 1,798,932 | - |
Collections during the Period (-) | 477,133 | 317,939 | 491,290 |
Write-offs (-) (*) | - | 1,328 | 1,076,019 |
Corporate and Commercial Loans | - | 1,178 | 515,367 |
Retail Loans | - | - | 289,608 |
Credit Cards | - | 150 | 271,044 |
Others | - | - | - |
Balances at End of Period | 576,487 | 1,476,489 | 3,219,798 |
Specific Provisions (-) | 451,816 | 1,126,227 | 2,689,448 |
Net Balance on Balance Sheet | 124,671 | 350,262 | 530,350 |
(*) of which TL 1,059,931 thousands is resulted from sale of non-performing loans.
Prior Period | Group III | Group IV | Group V |
Substandard Loans and Receivables | Doubtful Loans and Receivables | Uncollectible Loans and Receivables | |
Balances at Beginning of Period | 405,091 | 748,030 | 2,147,708 |
Additions during the Period (+) | 2,241,205 | 59,594 | 47,548 |
Transfer from Other NPL Categories (+) | - | 1,543,105 | 1,350,938 |
Transfer to Other NPL Categories (-) | 1,543,105 | 1,350,938 | - |
Collections during the Period (-) | 316,471 | 242,333 | 488,662 |
Write-offs (-) (*) | 537 | 611 | 196,537 |
Corporate and Commercial Loans | 537 | 609 | 119,188 |
Retail Loans | - | - | 33,424 |
Credit Cards | - | 2 | 43,925 |
Others | - | - | - |
Balances at End of Period | 786,183 | 756,847 | 2,860,995 |
Specific Provisions (-) | 599,750 | 579,036 | 2,388,912 |
Net Balance on Balance Sheet | 186,433 | 177,811 | 472,083 |
(*) of which TL 83,080 thousands is resulted from sale of non-performing loans.
Movements in specific loan provisions
Current Period | Corporate/ Commercial Loans | Consumer Loans | Credit Cards | Total |
Balances at End of Prior Period | 1,329,001 | 1,270,403 | 968,294 | 3,567,698 |
Additions during the Period(+) | 1,255,839 | 897,204 | 591,817 | 2,744,860 |
Restructured/Rescheduled Loans (-) | - | - | - | - |
Collections during the Period (-) | 152,378 | 514,410 | 302,405 | 969,193 |
Write-offs (-) (*) | 515,810 | 288,870 | 271,194 | 1,075,874 |
Balances at End of Period | 1,916,652 | 1,364,327 | 986,512 | 4,267,491 |
(*) of which TL 1,058,459 thousands is resulted from sale of non-performing loans.
Prior Period | Corporate/ Commercial Loans | Consumer Loans | Credit Cards | Total |
Balances at End of Prior Period | 1,158,403 | 823,655 | 691,903 | 2,673,961 |
Additions during the Period(+) | 509,512 | 857,543 | 528,196 | 1,895,251 |
Restructured/Rescheduled Loans (-) | - | - | - | - |
Collections during the Period (-) | 220,938 | 377,383 | 207,878 | 806,199 |
Write-offs (-) | 117,976 | 33,412 | 43,927 | 195,315 |
Balances at End of Period | 1,329,001 | 1,270,403 | 968,294 | 3,567,698 |
(*) of which TL 80,710 thousands is resulted from sale of non-performing loans.
Non-performing loans and other receivables in foreign currencies
| Group III | Group IV | Group V |
Substandard Loans and Receivables | Doubtful Loans and Receivables | Uncollectible Loans and Receivables | |
Current Period | | | |
Balance at End of Period | 34,476 | 363,587 | 722,774 |
Specific Provisions (-) | 29,951 | 234,409 | 512,422 |
Net Balance at Balance Sheet | 4,525 | 129,178 | 210,352 |
| | | |
Prior Period | | | |
Balance at End of Period | 180,731 | 37,931 | 535,189 |
Specific Provisions (-) | 138,781 | 10,172 | 422,070 |
Net Balance at Balance Sheet | 41,950 | 27,759 | 113,119 |
Gross and net non-performing loans and receivables as per customer categories
| Group III | Group IV | Group V |
Substandard Loans and Receivables | Doubtful Loans and Receivables | Uncollectible Loans and Receivables | |
Current Period (Net) | 124,671 | 350,262 | 530,350 |
Loans to Individuals and Corporates (Gross) | 576,487 | 1,476,489 | 3,218,482 |
Specific Provision (-) | 451,816 | 1,126,227 | 2,688,132 |
Loans to Individuals and Corporates (Net) | 124,671 | 350,262 | 530,350 |
Banks (Gross) | - | - | 311 |
Specific Provision (-) | - | - | 311 |
Banks (Net) | - | - | - |
Other Loans and Receivables (Gross) | - | - | 1,005 |
Specific Provision (-) | - | - | 1,005 |
Other Loans and Receivables (Net) | - | - | - |
Prior Period (Net) | 186,433 | 177,811 | 472,083 |
Loans to Individuals and Corporates (Gross) | 786,183 | 756,847 | 2,859,679 |
Specific Provision (-) | 599,750 | 579,036 | 2,387,596 |
Loans to Individuals and Corporates (Net) | 186,433 | 177,811 | 472,083 |
Banks (Gross) | - | - | 311 |
Specific Provision (-) | - | - | 311 |
Banks (Net) | - | - | - |
Other Loans and Receivables (Gross) | - | - | 1,005 |
Specific Provision (-) | - | - | 1,005 |
Other Loans and Receivables (Net) | - | - | - |
Collaterals received for non-performing loans
Current Period | Corporate/ Commercial Loans | Consumer Loans | Credit Cards | Total |
Loans Collateralized by Cash | 3,016 | 184 | - | 3,200 |
Loans Collateralized by Mortgages | 1,391,416 | 142,402 | - | 1,533,818 |
Loans Collateralized by Pledged Assets | 192,660 | 47,119 | - | 239,779 |
Loans Collateralized by Cheques and Notes | 211,665 | 7,286 | - | 218,951 |
Loans Collateralized by Other Collaterals | 919,836 | 861,462 | - | 1,781,298 |
Unsecured Loans | 95,253 | 413,963 | 986,512 | 1,495,728 |
Total | 2,813,846 | 1,472,416 | 986,512 | 5,272,774 |
Prior Period | Corporate/ Commercial Loans | Consumer Loans | Credit Cards | Total |
Loans Collateralized by Cash | 1,999 | 201 | - | 2,200 |
Loans Collateralized by Mortgages | 911,000 | 88,562 | - | 999,562 |
Loans Collateralized by Pledged Assets | 224,454 | 53,650 | - | 278,104 |
Loans Collateralized by Cheques and Notes | 299,845 | 9,390 | - | 309,235 |
Loans Collateralized by Other Collaterals | 530,469 | 829,081 | - | 1,359,550 |
Unsecured Loans | 120,701 | 366,379 | 968,294 | 1,455,374 |
Total | 2,088,468 | 1,347,263 | 968,294 | 4,404,025 |
5.1.5.11 Liquidation policy for uncollectible loans and receivables
Such loans and receivables are collected through legal follow-up and liquidation of collaterals.
5.1.5.12 Write-off policy
The Bank's general policy for write-offs of loans and receivables under follow-up is to write of such loans and receivables that are proven to be uncollectible in legal follow-up process.
5.1.6 Investments held-to-maturity
5.1.6.1 Investment subject to repurchase agreements and provided as collateral/blocked
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Collateralised/Blocked Investments | 5,793,705 | 4,341,183 | 4,956,015 | 2,108,752 |
Investments subject to Repurchase Agreements | 3,147,892 | - | 4,081,537 | 317,809 |
Total | 8,941,597 | 4,341,183 | 9,037,552 | 2,426,561 |
5.1.6.2 Government securities held-to-maturity
| Current Period | Prior Period |
Government Bonds | 19,108,804 | 17,776,978 |
Treasury Bills | - | - |
Other Government Securities | - | - |
Total | 19,108,804 | 17,776,978 |
5.1.6.3 Investments held-to-maturity
| Current Period | Prior Period |
Debt Securities | 21,236,112 | 19,961,209 |
Quoted at Stock Exchange | 20,462,344 | 19,106,455 |
Unquoted at Stock Exchange | 773,768 | 854,754 |
Valuation Increase/(Decrease) | 2,404,072 | 1,794,603 |
Total | 23,640,184 | 21,755,812 |
5.1.6.4 Movement of investments held-to-maturity
| Current Period | Prior Period |
Balances at Beginning of Period | 21,755,812 | 21,014,502 |
Foreign Currency Differences On Monetary Assets | 1,963,183 | 1,945,865 |
Purchases during the Period | 498,479 | 1,331,647 |
Disposals through Sales/Redemptions (*) | (1,186,759) | (2,971,899) |
Valuation Effect | 609,469 | 435,697 |
Balances at End of Period | 23,640,184 | 21,755,812 |
In the prior period,
(*) As per the exceptions set out in the relevant accounting standards (TAS 39) for the sale or reclassification of investments, certain credit linked notes with a total face value of USD 300,000,000 were sold.
5.1.7 Investments in associates
5.1.7.1 Investments in associates
| Associate | Address (City/ Country) | Bank's Share - If Different, Voting Rights (%) | Bank's Risk Group Share (%) |
1 | Bankalararası Kart Merkezi AŞ (1) | İstanbul/Turkey | 10.15 | 10.15 |
2 | Yatırım Finansman Menkul Değerler AŞ (1) | İstanbul/Turkey | 0.77 | 0.77 |
3 | İstanbul Takas ve Saklama Bankası AŞ (1) | İstanbul/Turkey | 5.25 | 5.28 |
4 | Borsa İstanbul AŞ (1) | İstanbul/Turkey | 0.30 | 0.34 |
5 | KKB Kredi Kayıt Bürosu AŞ (1) | İstanbul/Turkey | 9.09 | 9.09 |
6 | Türkiye Cumhuriyet Merkez Bankası AŞ (2) | Ankara /Turkey | 2.48 | 2.48 |
7 | Kredi Garanti Fonu AŞ (1) | Ankara /Turkey | 1.75 | 1.75 |
|
Total Assets |
Shareholders' Equity | Total Fixed Assets (*) |
Interest Income | Income on Securities Portfolio | Current Period Profit/Loss | Prior Period Profit/Loss | Company's Fair Value |
1 | 75,434 | 44,177 | 48,085 | 672 | - | 14,517 | 9,605 | - |
2 | 885,750 | 70,170 | 3,534 | 12,885 | 1,102 | (3,130) | (791) | - |
3 | 7,494,521 | 994,440 | 98,224 | 216,309 | 5,881 | 162,178 | 132,453 | - |
4 | 1,084,281 | 1,043,795 | 211,102 | 27,176 | 979 | 223,697 | 289,559 | - |
5 | 185,448 | 129,648 | 135,578 | 2,817 | 90 | 16,458 | 26,782 | - |
6 | 450,139,064 | 54,629,350 | 684,192 | 6,120,123 | 2,238,649 | 20,736,851 | 8,529,957 | - |
7 | 324,489 | 298,991 | 7,562 | 12,390 | - | 17,738 | 19,890 | - |
(1) Financial information is as of 30 September 2016.
(2) Financial information is as of 31 December 2015.
(*) Total fixed assets include tangible and intangible assets.
5.1.7.2 Movement of investments in associates
| Current Period | Prior Period |
Balance at Beginning of Period | 36,698 | 36,698 |
Movements during the Period | - | - |
Acquisitions | - | - |
Bonus Shares Received | - | - |
Dividends from Current Year Profit | - | - |
Sales | - | - |
Increase in Market Values | - | - |
Impairment Reversals/(Losses) | - | - |
Balance at End of Period | 36,698 | 36,698 |
Capital Commitments | - | - |
Share Percentage at the End of Period (%) | - | - |
5.1.7.3 Sectoral distribution of investments and associates
Investments in Associates | Current Period | Prior Period |
Banks | - | - |
Insurance Companies | - | - |
Factoring Companies | - | - |
Leasing Companies | - | - |
Finance Companies | 34,984 | 34,984 |
Other Associates | 1,714 | 1,714 |
5.1.7.4 Quoted associates
None.
5.1.7.5 Valuation methods of investments in associates
Investments in Associates | Current Period | Prior Period |
Valued at Cost | 36,698 | 36,698 |
Valued at Fair Value | - | - |
5.1.7.6 Investments in associates sold during the current period
None.
5.1.7.7 Investments in associates acquired during the current period
None.
5.1.8 Investments in affiliates
5.1.8.1 Information on capital adequacy of major affiliates
The Bank does not have any capital needs for its affiliates included in the calculation of its consolidated capital adequacy standard ratio. Information on capital adequacy of major affiliates is presented below.
Current Period | Garanti Bank International NV | Garanti Finansal Kiralama AŞ | Garanti Holding BV |
COMMON EQUITY TIER I CAPITAL |
|
| |
Paid-in Capital to be Entitled for Compensation after All Creditors | 511,324 | 357,848 | 1,426,711 |
Share Premium | - | - | 48,030 |
Share Cancellation Profits | - | - | - |
Reserves | 894,029 | 483,911 | (267,654) |
Other Comprehensive Income according to TAS | 652,504 | - | 17,074 |
Current and Prior Periods' Profits | 50,997 | 84,003 | 9,425 |
General Reserves for Possible Losses | - | - | - |
Common Equity Tier I Capital Before Deductions | 2,108,854 | 925,762 | 1,233,586 |
Deductions From Common Equity Tier I Capital | | | |
Current and Prior Periods' Losses not Covered by Reserves, and Losses Accounted under Equity according to TAS (-) | 76,159 | 452 | 317,070 |
Leasehold Improvements on Operational Leases (-) | - | 87 | 7,930 |
Goodwill and Other Intangible Assets and Related Deferred Taxes (-) | 10,193 | 4,694 | 131,009 |
Net Deferred Tax Asset/Liability (-) | - | - | 7,129 |
Total Deductions from Common Equity Tier I Capital | 86,352 | 5,233 | 463,138 |
Total Common Equity Tier I Capital | 2,022,502 | 920,529 | 770,448 |
Total Deductions From Tier I Capital | 6,795 | 3,129 | 92,092 |
Total Tier I Capital | 2,015,707 | 917,400 | 678,356 |
TIER II CAPITAL | 185,100 | - | 81,435 |
CAPITAL BEFORE DEDUCTIONS | 2,200,807 | 917,400 | 759,791 |
Net Book Values of Movables and Immovables Exceeding the Limit Defined in the Article 57, Clause 1 of the Banking Law and the Assets Acquired against Overdue Receivables and Held for Sale but Retained more than Five Years (-) | - | 465 | - |
TOTAL CAPITAL | 2,200,807 | 916,935 | 759,791 |
Prior Period | Garanti Bank International NV | Garanti Finansal Kiralama AŞ | Garanti Holding BV |
COMMON EQUITY TIER I CAPITAL |
|
| |
Paid-in Capital to be Entitled for Compensation after All Creditors | 438,130 | 357,848 | 1,168,942 |
Share Premium | - | - | 41,090 |
Share Cancellation Profits | - | - | - |
Reserves | 859,634 | 329,714 | (327,914) |
Other Comprehensive Income according to TAS | 406,771 | 75,795 | 27,141 |
Current and Prior Periods' Profits | 34,395 | 110,292 | 58,156 |
General Reserve for Possible Losses | - | 11,814 | - |
Common Equity Tier I Capital Before Deductions | 1,738,930 | 885,463 | 967,415 |
Deductions From Common Equity Tier I Capital | | | |
Current and Prior Periods' Losses not Covered by Reserves, and Losses Accounted under Equity according to TAS (-) | 92,365 | 399 | 231,882 |
Leasehold Improvements on Operational Leases (-) | - | 113 | 9,131 |
Goodwill and Other Intangible Assets and Related Deferred Taxes (-) | 6,285 | 2,351 | 73,220 |
Net Deferred Tax Asset/Liability (-) | - | - | 6,768 |
Total Deductions from Common Equity Tier I Capital | 98,650 | 2,863 | 321,001 |
Total Common Equity Tier I Capital | 1,640,280 | 882,600 | 646,414 |
Total Deductions From Tier I Capital | 9,427 | 3,527 | 119,982 |
Total Tier I Capital | 1,630,853 | 879,073 | 526,432 |
TIER II CAPITAL | 253,368 | - | 57,607 |
CAPITAL BEFORE DEDUCTIONS | 1,884,221 | 879,073 | 584,039 |
Net Book Values of Movables and Immovables Exceeding the Limit Defined in the Article 57, Clause 1 of the Banking Law and the Assets Acquired against Overdue Receivables and Held for Sale but Retained more than Five Years (-) | - | - | - |
TOTAL CAPITAL | 1,884,221 | 879,073 | 584,039 |
5.1.8.2 Investments in affiliates
| Affiliate | Address (City/ Country) | Bank's Share - If Different, Voting Rights (%) | Bank's Risk Group Share (%) |
1 | Garanti Bilişim Teknolojisi ve Tic. TAŞ | Istanbul/Turkey | 100.00 | 100.00 |
2 | Garanti Ödeme Sistemleri AŞ | Istanbul/Turkey | 99.96 | 100.00 |
3 | Garanti Hizmet Yönetimi AŞ | Istanbul/Turkey | 96.40 | 99.40 |
4 | Garanti Kültür AŞ | Istanbul/Turkey | 100.00 | 100.00 |
5 | Garanti Konut Finansmanı Danışmanlık Hiz. AŞ | Istanbul/Turkey | 100.00 | 100.00 |
6 | Garanti Finansal Kiralama AŞ | Istanbul/Turkey | 100.00 | 100.00 |
7 | Garanti Faktoring AŞ | Istanbul/Turkey | 81.84 | 81.84 |
8 | Garanti Yatırım Menkul Kıymetler AŞ | Istanbul/Turkey | 100.00 | 100.00 |
9 | Garanti Portföy Yönetimi AŞ | Istanbul/Turkey | 100.00 | 100.00 |
10 | Garanti Emeklilik ve Hayat AŞ | Istanbul/Turkey | 84.91 | 84.91 |
11 | Garanti Bank International NV | Amsterdam/the Netherlands | 100.00 | 100.00 |
12 | Garanti Holding BV | Amsterdam/the Netherlands | 100.00 | 100.00 |
|
Total Assets |
Shareholders' Equity | Total Fixed Assets (*) |
Interest Income | Income on Securities Portfolio | Current Period Profit/Loss | Prior Period Profit/Loss | Company's Fair Value |
|
1 | 73,520 | 62,255 | 59 | 2,558 | 182 | 3,157 | 8,843 | - |
|
2 | 27,221 | 14,784 | 754 | 579 | 56 | 1,270 | 962 | - |
|
3 | 6,221 | 3,794 | 27 | 486 | 258 | (4,028) | 2,306 | - |
|
4 | 2,257 | 1,591 | 794 | - | 74 | 69 | 772 | - |
|
5 | 3,094 | 1,695 | 52 | 219 | 35 | 694 | 379 | - | - |
6 | 5,450,502 | 925,311 | 9,586 | 405,126 | - | 84,003 | 110,292 | - |
|
7 | 2,899,452 | 185,453 | 7,528 | 246,599 | - | 19,716 | 25,430 | - |
|
8 | 111,904 | 67,490 | 14,391 | 1,423 | 2,417 | 20,156 | 6,146 | - |
|
9 | 59,170 | 52,212 | 4,303 | 4,368 | - | 12,971 | 8,029 | - |
|
10 | 1,730,004 | 1,325,118 | 39,426 | 151,012 | 2,409 | 245,940 | 194,445 | - |
|
11 | 17,882,527 | 2,032,031 | 101,974 | 551,284 | 95,796 | 50,996 | 34,395 | - |
|
12 | 1,260,553 | 1,260,407 | - | - | - | (252) | (217) | - |
|
(*) Total fixed assets include tangible and intangible assets.
5.1.8.3 Movement of investments in affiliates
| Current Period | Prior Period |
Balance at Beginning of Period | 4,446,499 | 3,708,418 |
Movements during the Period | 727,365 | 738,081 |
Acquisitions | 53,484 | - |
Bonus Shares Received | - | - |
Earnings from Current Year Profit | 398,272 | 400,315 |
Sales/Liquidations | (157,635) | - |
Reclassification of Shares | - | - |
Increase/(Decrease) in Market Values | 13,003 | 70,122 |
Currency Differences on Foreign Affiliates | 420,241 | 267,644 |
Impairment Reversals/(Losses) | - | - |
Balance at End of Period | 5,173,864 | 4,446,499 |
Capital Commitments | - | - |
Share Percentage at the End of Period (%) | - | - |
5.1.8.4 Sectoral distribution of investments in affiliates
Affiliates | Current Period | Prior Period |
Banks | 2,025,895 | 1,764,623 |
Insurance Companies | 1,125,108 | 916,536 |
Factoring Companies | 151,548 | 135,644 |
Leasing Companies | 925,310 | 871,165 |
Finance Companies | 841,767 | 654,295 |
Other Affiliates | 104,236 | 104,236 |
5.1.8.5 Quoted affiliates
None.
5.1.8.6 Valuation methods of investments in affiliates
Affiliates | Current Period | Prior Period |
Valued at Cost | 104,236 | 104,236 |
Valued at Fair Value (*) | 5,069,628 | 4,342,263 |
(*) The balances are as per the results of equity accounting application.
5.1.8.7 Investments in affiliates disposed during the current period
The Bank sold its 1729 shares representing 99.94% of the share capital of GarantiBank Moscow AO to Sovcombank, a bank operating in Russia for a purchase price of USD 38,389,786 and realized a loss of TL 43,243 thousand.
5.1.8.8 Investments in affiliates acquired during the current period
None.
5.1.9 Investments in Joint-Ventures
None.
5.1.10 Lease receivables (net)
None.
5.1.11 Derivative financial assets held for risk management
5.1.11.1 Positive differences on derivative financial instruments held for risk management
Derivative Financial Assets Held for Risk Management | Current Period | Prior Period | ||
TL | FC | TL | FC | |
Fair Value Hedges | 73,946 | 10,420 | 60,616 | 7,483 |
Cash Flow Hedges | 5,526 | 499,322 | 28,448 | 584,450 |
Net Foreign Investment Hedges | - | - | - | - |
Total | 79,472 | 509,742 | 89,064 | 591,933 |
As of 31 December 2016, the face values and the net fair values, recognised in the balance sheet, of the derivative financial instruments held for risk management purposes, are summarized below:
| Current Period | Prior Period | ||||
Face Value | Asset | Liability | Face Value | Asset | Liability | |
Interest Rate Swaps | 30,864,971 | 144,968 | 115,007 | 18,791,415 | 101,340 | 120,219 |
-TL | 8,307,595 | 79,472 | 26,671 | 5,239,355 | 89,064 | 10,928 |
-FC | 22,557,376 | 65,496 | 88,336 | 13,552,060 | 12,276 | 109,291 |
Cross Currency Swaps | 3,670,474 | 444,246 | 164,529 | 5,279,626 | 579,657 | 130,272 |
-TL | 944,728 | - | - | 1,868,085 | - | - |
-FC | 2,725,746 | 444,246 | 164,529 | 3,411,541 | 579,657 | 130,272 |
Total | 34,535,445 | 589,214 | 279,536 | 24,071,041 | 680,997 | 250,491 |
5.1.11.1.1 Fair value hedge accounting
Current Period | | | | | | |
Hedging Item | Hedged Item | Type of Risk | Fair Value Change of Hedged Item | Net Fair Value Change of Hedging Item | Income Statement Effect (gains/losses from derivative financial instruments) | |
Asset | Liability | |||||
Interest Rate Swaps | Fixed-rate commercial loans | Interest rate risk | 42,431 | 15,833 | (75,781) | (17,517) |
Interest Rate Swaps | Fixed-rate mortgage loans | Interest rate risk | (42,169) | 48,387 | (344) | 5,874 |
Interest Rate Swaps | Fixed-rate securities | Interest rate risk | (14,515) | 19,803 | (17,079) | (11,791) |
Cross Currency Swaps | Fixed-rate securities issued | Interest rate and foreign currency exchange rate risk | (13,071) | - | (164,529) | (177,600) |
Cross Currency Swaps | Fixed-rate commercial loans | Interest rate and foreign currency exchange rate risk | 231 | 343 | - | 574 |
Prior Period | | | | | | |
Hedging Item | Hedged Item | Type of Risk | Fair Value Change of Hedged Item | Net Fair Value Change of Hedging Item | Income Statement Effect (gains/losses from derivative financial instruments) | |
Asset | Liability | |||||
Interest Rate Swaps | Fixed-rate commercial loans | Interest rate risk | 65,224 | 8,104 | (78,491) | (5,163) |
Interest Rate Swaps | Fixed-rate mortgage loans | Interest rate risk | 173 | - | (313) | (140) |
Interest Rate Swaps | Fixed-rate securities | Interest rate risk | (48,755) | 59,995 | (12,487) | (1,247) |
Cross Currency Swaps | Fixed-rate securities issued | Interest rate and foreign currency exchange rate risk | (13,669) | - | (130,272) | (143,941) |
5.1.11.1.2 Cash flow hedge accounting
Current Period | | | | | | ||
Hedging Item | Hedged Item | Type of Risk | Fair Value Change of Hedged Item | Gains/Losses Accounted under Shareholders' Equity in the Period | Gains/Losses Accounted under Income Statement in the Period | Ineffective Portion (net) Accounted under Income Statement | |
Asset | Liability | ||||||
Interest Rate Swaps | Floating-rate securities issued | Cash flow risk resulted from change in market interest rates | 66 | - | (30) | (100) | - |
Interest Rate Swaps | Floating-rate funds borrowed | Cash flow risk resulted from change in market interest rates | 46,611 | (21,803) | 20,313 | (20,654) | (135) |
Interest Rate Swaps | Floating-rate deposit | Cash flow risk resulted from change in market interest rates | 14,268 | - | 14,325 | (3,344) | - |
Cross Currency Swaps | Floating-rate securities issued | Cash flow risk resulted from change in market interest rates and foreign currency exchange rates | - | - | (6,677) | (12,091) | - |
Cross Currency Swaps | Floating-rate funds borrowed | Cash flow risk resulted from change in market interest rates and foreign currency exchange rates | 443,903 | - | (17,541) | (89,625) | 51 |
In the current period, the loss reclassified from the shareholders' equity to the income statement due to the ceased hedging transactions amounted to TL 619 thousands (31 December 2015: TL 1,238 thousands). There were no gain/loss recognised in the shareholders' equity in the current period (31 December 2015: a loss of TL 619 thousands).
Prior Period | | | | | | ||
Hedging Item | Hedged Item | Type of Risk | Fair Value Change of Hedged Item | Gains/Losses Accounted under Shareholders' Equity in the Period | Gains/Losses Accounted under Income Statement in the Period | Ineffective Portion (net) Accounted under Income Statement | |
Asset | Liability | ||||||
Interest Rate Swaps | Floating-rate securities issued | Cash flow risk resulted from change in market interest rates | 74 | - | 101 | 133 | - |
Interest Rate Swaps | Floating-rate funds borrowed | Cash flow risk resulted from change in market interest rates | 33,167 | (28,928) | 8,616 | 847 | (1,219) |
Cross Currency Swaps | Floating-rate securities issued | Cash flow risk resulted from change in market interest rates and foreign currency exchange rates | 262,771 | - | 4,416 | 24,784 | 11 |
Cross Currency Swaps | Floating-rate funds borrowed | Cash flow risk resulted from change in market interest rates and foreign currency exchange rates | 316,886 | - | 69,335 | 70,610 | 921 |
5.1.12 Tangible assets
|
Real Estates | Leased Tangible Assets |
Vehicles | Other Tangible Assets |
Total |
At End of Prior Period: | | | | | |
Cost | 2,496,570 | 326,195 | 15,477 | 1,687,432 | 4,525,674 |
Accumulated Depreciation (-) | (2,565) | (305,178) | (11,872) | (1,131,834) | (1,451,449) |
Net Book Value at End of Prior Period | 2,494,005 | 21,017 | 3,605 | 555,598 | 3,074,225 |
| | | | | |
At End of Current Period: | | | | | |
Additions | 255,718 | 17,904 | 1,302 | 475,392 | 750,316 |
Revaluation Model Difference | - | - | - | - | - |
Transfers from Investment Property | - | - | - | - | - |
Disposals (Costs) | (127,743) | (62,516) | (677) | (180,393) | (371,329) |
Disposals (Accumulated Depreciation) | 277 | 60,145 | 607 | 86,929 | 147,958 |
Impairment/Reversal of Impairment Losses | - | - | - | - | - |
Depreciation Expense for Current Period (-) | (15,828) | (5,464) | (1,384) | (189,746) | (212,422) |
Cost at End of Current Period | 2,624,545 | 281,583 | 16,102 | 1,982,431 | 4,904,661 |
Accumulated Depreciation at End of Current Period | (18,116) | (250,497) | (12,649) | (1,234,651) | (1,515,913) |
Net Book Value at End of Current Period | 2,606,429 | 31,086 | 3,453 | 747,780 | 3,388,748 |
5.1.13 Intangible assets
5.1.13.1 Useful lives and amortisation rates
Intangible assets include softwares and other intangible assets. The estimated useful lives of such assets vary between 3 and 15 years.
5.1.13.2 Amortisation methods
Intangible assets are amortised on a straight-line basis from the date of capitalisation.
5.1.13.3 Balances at beginning and end of current period
| Beginning of Period | End of Period | ||
Cost | Accumulated Amortisation | Cost | Accumulated Amortisation | |
Intangible Assets | 487,362 | 248,349 | 377,591 | 195,001 |
5.1.13.4 Movements of intangible assets for current period
| Current Period | Prior Period |
Net Book Value at End of Prior Period | 182,590 | 173,966 |
Internally Generated Intangibles | - | - |
Additions due to Mergers, Transfers and Acquisition | 107,247 | 46,353 |
Disposals (-) | (180) | (235) |
Impairment Losses/Reversals to/from Revaluation Surplus | - | - |
Impairment Losses Recorded in Income Statement | - | - |
Impairment Losses Reversed from Income Statement | - | - |
Amortisation Expense for Current Period (-) | (52,994) | (37,054) |
Currency Translation Differences on Foreign Operations | - | (440) |
Other Movements | 2,350 | - |
Net Book Value at End of Current Period | 239,013 | 182,590 |
5.1.13.5 Details for any individually material intangible assets
None.
5.1.13.6 Intangible assets capitalised under government incentives at fair values
None.
5.1.13.7 Revaluation method of intangible assets capitalised under government incentives and valued at fair values at capitalisation dates
None.
5.1.13.8 Net book value of intangible asset that are restricted in usage or pledged
None.
5.1.13.9 Commitments to acquire intangible assets
None.
5.1.13.10 Disclosure on revalued intangible assets
None.
5.1.13.11 Research and development costs expensed during current period
None.
5.1.13.12 Goodwill
None.
5.1.13.13 Movements in goodwill during current period
None.
5.1.14 Investment property
| Current Period | Prior Period |
Net Book Value at Beginning Period | 381,270 | 374,945 |
Additions | 231,273 | - |
Transfers to Tangible Assets | 50,110 | (22,954) |
Fair Value Change (*) | 7,717 | 29,279 |
Net Book Value at End of Current Period | 670,370 | 381,270 |
(*) Total gain of TL 7,717 thousands from revaluation of investment property is included in other operating income.
The investment property is held for operational leasing purposes.
5.1.15 Deferred tax asset
As of 31 December 2016, the Bank has a deferred tax asset of TL 127,709 thousands (31 December 2015: TL 381,541 thousands) calculated as the net amount remaining after netting of tax deductible timing differences and taxable timing differences.
The Bank does not have any deferred tax assets on tax losses carried forward or tax deductions and exemptions as of 31 December 2016. However, there is a deferred tax asset of TL 407,822 thousands (31 December 2015: TL 578,378 thousands) and deferred tax liability of TL 280,113 thousands (31 December 2015: TL 196,837 thousands) presented as net in the accompanying financial statements on all taxable temporary differences arising between the carrying amounts and the taxable amounts of assets and liabilities on the financial statements that will be considered in the calculation of taxable earnings in the future periods.
For the cases where such differences are related with certain items on the shareholders' equity accounts, the deferred taxes are charged or credited directly to these accounts.
| Current Period | Prior Period | ||
Tax Base | Deferred Tax Amount | Tax Base | Deferred Tax Amount | |
Provisions (*) | 944,764 | 188,953 | 825,024 | 165,005 |
Differences between the Carrying Values and Taxable Values of Financial Assets (**) | (506,334) | (115,638) | 691,156 | 158,867 |
Revaluation Differences on Real Estates | (1,722,648) | (22,865) | (1,723,078) | (23,459) |
Other | 386,302 | 77,259 | 405,643 | 81,128 |
Total Deferred Tax Asset, Net | (897,916) | 127,709 | 198,745 | 381,541 |
(*) Consists of reserve for employee benefits, provision for promotion expenses of credit cards and other provisions.
(**) Calculations are performed at the relevant tax rates applicable in the country of the foreign branches' financial assets.
As of 31 December 2016, TL 338,418 thousands of deferred tax expense (31 December 2015: TL 174,198 thousands) and TL 84,586 thousands of deferred tax income (31 December 2015: TL 78,354 thousands) are recognised in the income statement and the shareholders' equity, respectively.
5.1.16 Assets held for sale and assets of discontinued operations
| Current Period | Prior Period |
End of Prior Period | | |
Cost | 356,160 | 178,986 |
Accumulated Depreciation (-) | (9,181) | (7,970) |
Net Book Value | 346,979 | 171,016 |
End of Current Period | | |
Additions | 335,793 | 263,352 |
Disposals (Cost) | (82,753) | (84,386) |
Disposals (Accumulated Depreciation) | 1,358 | 3,886 |
Impairment Losses (-) | (2,820) | (1,792) |
Depreciation Expense for Current Period (-) | (8,831) | (5,097) |
Currency Translation Differences on Foreign Operations | - | - |
Cost | 606,380 | 356,160 |
Accumulated Depreciation (-) | (16,654) | (9,181) |
Net Book Value | 589,726 | 346,979 |
As of balance sheet date, the net book values of assets held for sale on which rights of repurchase exist amounting to TL 359,660 thousands.
5.1.17 Other assets
5.1.17.1 Receivables from term sale of assets
| Current Period | Prior Period |
Sale of Investments in Associates, Affiliates and Joint Ventures | - | - |
Sale of Real Estates | - | - |
Sale of Financial Assets Available-for-Sale | 16,670 | - |
Sale of Other Assets | 2,305 | 3,127 |
Total | 18,975 | 3,127 |
5.1.17.2 Prepaid expenses, taxes and similar items
| Current Period | Prior Period |
Prepaid Expenses | 477,898 | 389,443 |
Prepaid Taxes | - | - |
5.1.18 Accrued interest and income
The details of accrued interest and income allocated to the related items on the assets side of the balance sheet are as follows:
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Central Bank of Turkey | 79,969 | 38 | 26,710 | 5 |
Financial Assets at Fair Value through Profit or Loss | 19 | 599 | 352 | 540 |
Banks | 3,611 | 21,752 | 672 | 11,529 |
Interbank Money Markets | - | 1 | - | 1 |
Financial Assets Available-for-Sale | 1,299,160 | 9,371 | 1,036,656 | 14,863 |
Loans | 2,031,750 | 837,928 | 1,439,128 | 653,153 |
Investments Held-to-Maturity | 2,302,531 | 127,299 | 1,670,426 | 124,392 |
Other Accruals | 3,799 | - | 8,099 | - |
Total | 5,720,839 | 996,988 | 4,182,043 | 804,483 |
5.2 Liabilities
5.2.1 Maturity profile of deposits
Current Period | Demand | 7 Days Notice | Up to 1 Month | 1-3 Months | 3-6 Months | 6-12 Months | 1 Year and Over | Accumulating Deposit Accounts | Total |
Saving Deposits
| 9,362,638 | - | 3,519,154 | 39,387,584 | 523,583 | 360,800 | 470,517 | 4,046 | 53,628,322 |
Foreign Currency Deposits | 15,943,064 | - | 5,585,618 | 41,555,186 | 1,796,018 | 5,229,260 | 9,800,564 | 56,941 | 79,966,651 |
Residents in Turkey | 15,250,673 | - | 5,462,031 | 39,058,254 | 1,582,659 | 1,059,641 | 1,085,221 | 55,783 | 63,554,262 |
Residents in Abroad | 692,391 | - | 123,587 | 2,496,932 | 213,359 | 4,169,619 | 8,715,343 | 1,158 | 16,412,389 |
Public Sector Deposits | 493,327 | - | 72,724 | 27,688 | 116 | 4,994 | 24 | - | 598,873 |
Commercial Deposits | 8,186,591 | - | 4,193,368 | 5,320,846 | 126,355 | 163,481 | 872,965 | - | 18,863,606 |
Other
| 212,836 | - | 140,766 | 1,023,250 | 52,904 | 447,810 | 553,501 | - | 2,431,067 |
Precious Metal Deposits
| 1,753,776 | - | - | 82,984 | 12,264 | 22,493 | 153,015 | - | 2,024,532 |
Bank Deposits
| 2,849,464 | - | 392,429 | 73,408 | 183,837 | 121,962 | 97,446 | - | 3,718,546 |
Central Bank of Turkey | - | - | - | - | - | - | - | - | - |
Domestic Banks | 3,619 | - | 391,559 | 15,107 | 16,180 | 118,267 | 14,442 | - | 559,174 |
Foreign Banks | 1,685,663 | - | 870 | 58,301 | 167,657 | 3,695 | 83,004 | - | 1,999,190 |
Special Financial Institutions | 1,160,182 | - | - | - | - | - | - | - | 1,160,182 |
Other | - | - | - | - | - | - | - | - | - |
Total | 38,801,696 | - | 13,904,059 | 87,470,946 | 2,695,077 | 6,350,800 | 11,948,032 | 60,987 | 161,231,597 |
Prior Period | Demand | 7 Days Notice | Up to 1 Month | 1-3 Months | 3-6 Months | 6-12 Months | 1 Year and Over | Accumulating Deposit Accounts | Total |
Saving Deposits
| 7,209,432 | - | 2,979,904 | 34,257,111 | 1,104,133 | 327,887 | 481,267 | 4,699 | 46,364,433 |
Foreign Currency Deposits | 14,356,851 | - | 6,633,102 | 30,908,146 | 3,113,640 | 3,138,788 | 11,476,049 | 56,573 | 69,683,149 |
Residents in Turkey | 13,566,495 | - | 6,227,505 | 28,221,569 | 2,651,518 | 1,064,402 | 796,622 | 55,408 | 52,583,519 |
Residents in Abroad | 790,356 | - | 405,597 | 2,686,577 | 462,122 | 2,074,386 | 10,679,427 | 1,165 | 17,099,630 |
Public Sector Deposits | 624,252 | - | 7,629 | 26,642 | 43 | 144 | 31 | - | 658,741 |
Commercial Deposits | 6,178,956 | - | 3,617,921 | 4,298,918 | 170,551 | 389,198 | 574,360 | - | 15,229,904 |
Other
| 210,284 | - | 89,687 | 1,147,371 | 268,316 | 3,434 | 524,269 | - | 2,243,361 |
Precious Metal Deposits
| 1,085,578 | - | 106 | 11,175 | - | 57 | 101,849 | - | 1,198,765 |
Bank Deposits
| 1,814,017 | - | 1,579,003 | 340,476 | 1,567,749 | 91,248 | 128,486 | - | 5,520,979 |
Central Bank of Turkey | - | | 700,209 | - | - | - | - | - | 700,209 |
Domestic Banks | 2,975 | | 859,410 | 290,933 | 2,056 | - | 4 | - | 1,155,378 |
Foreign Banks | 709,340 | | 19,384 | 49,543 | 1,565,693 | 91,248 | 128,482 | - | 2,563,690 |
Special Financial Institutions | 1,101,702 | | - | - | - | - | - | - | 1,101,702 |
Other | - | | - | - | - | - | - | - | - |
Total | 31,479,370 | - | 14,907,352 | 70,989,839 | 6,224,432 | 3,950,756 | 13,286,311 | 61,272 | 140,899,332 |
5.2.1.1 Saving deposits and other deposit accounts insured by Saving Deposit Insurance Fund
Saving deposits covered by deposit insurance and total amount of deposits exceeding insurance coverage limit:
| Covered by Deposit Insurance | Over Deposit Insurance Limit | ||
Current Period | Prior Period | Current Period | Prior Period | |
Saving Deposits | 27,807,137 | 24,378,726 | 25,449,970 | 21,652,836 |
Foreign Currency Saving Deposits | 8,323,858 | 8,175,797 | 34,340,843 | 27,111,189 |
Other Saving Deposits | 821,559 | 590,229 | 1,114,240 | 576,940 |
Deposits held at Foreign Branches Under Foreign Insurance Coverage | - | - | - | - |
Deposits held at Off-Shore Branches Under Foreign Insurance Coverage | - | - | - | - |
5.2.1.2 Saving deposits at domestic branches of foreign banks in Turkey under the coverage of foreign insurance
None.
5.2.1.3 Saving deposits not covered by insurance limits
| Current Period | Prior Period |
Deposits and Other Accounts held at Foreign Branches | 860,876 | 673,677 |
Deposits and Other Accounts held by Shareholders and their Relatives
| - | - |
Deposits and Other Accounts of the Chairman and Members of Board of Directors, Chief Executive Officer, Senior Executive Officers and their Relatives
| 748,443 | 658,628 |
Deposits and Other Accounts held as Assets subject to the Crime defined in the Article 282 of the Turkish Criminal Code no. 5237 dated 26 September 2004 | - | - |
Deposits at Depository Banks established for Off-Shore Banking Activities in Turkey | - | - |
5.2.2 Negative differences on derivative financial liabilities held for trading
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Forward transactions | 242,659 | 61,117 | 221,159 | 124,268 |
Swap transactions | 1,993,468 | 745,041 | 1,093,920 | 350,255 |
Futures | - | 964 | - | 3,320 |
Options | 372,549 | 80,824 | 354,740 | 115,975 |
Other | - | - | - | - |
Total | 2,608,676 | 887,946 | 1,669,819 | 593,818 |
5.2.3 Funds borrowed
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Central Bank of Turkey | - | 1,880,102 | - | - |
Domestic Banks and Institutions | 343,595 | 502,401 | 259,222 | 331,117 |
Foreign Banks, Institutions and Funds | 1,778,067 | 35,782,203 | 2,283,041 | 30,564,417 |
Total | 2,121,662 | 38,164,706 | 2,542,263 | 30,895,534 |
5.2.3.1 Maturities of funds borrowed
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Short-Term | 341,819 | 2,452,722 | 259,222 | 660,528 |
Medium and Long-Term | 1,779,843 | 35,711,984 | 2,283,041 | 30,235,006 |
Total | 2,121,662 | 38,164,706 | 2,542,263 | 30,895,534 |
The Bank classified certain borrowings obtained through securitisations amounting to USD 2,000,000,000, as financial liability at fair value through profit/loss at the initial recognition. As of 31 December 2016, the accumulated credit risk change and the credit risk change recognised in the income statement amounted to gains of TL 442,139 thousands and of TL 314,843 thousands, respectively. The carrying value of the related financial liability amounted to TL 6,583,861 thousands, and the related current period income amounted to TL 314,843 thousands.
5.2.3.2 Disclosures for concentration areas of bank's liabilities
The Bank finances its ordinary banking activities through deposits and funds borrowed. Its deposit structure has a balanced TL and foreign currency concentration. The Bank's other funding sources specifically consist of foreign currency funds borrowed from abroad, TL funds obtained through repurchase transactions, and TL and foreign currency securities issued.
5.2.4 Other external funds
5.2.4.1 Securities issued
Current Period | TL | FC | ||
Short-Term | Medium and Long-Term | Short-Term | Medium and Long-Term | |
Nominal | 1,240,773 | 3,756,256 | - | 12,121,238 |
Cost | 1,197,023 | 3,477,513 | - | 12,044,056 |
Carrying Value (*) | 1,213,929 | 3,555,294 | - | 11,667,656 |
Prior Period | TL | FC | ||
Short-Term | Medium and Long-Term | Short-Term | Medium and Long-Term | |
Nominal | 802,079 | 2,827,547 | 160,141 | 10,982,481 |
Cost | 779,806 | 2,636,089 | 160,141 | 10,918,171 |
Carrying Value (*) | 790,461 | 2,615,083 | 160,472 | 10,632,753 |
(*) The Bank repurchased its own TL securities with a total face value of TL 107,896 thousands (31 December 2015: TL 121,998 thousands) and foreign currency securities with a total face value of USD 206,730,000 (31 December 2015: USD 206,730,000) and netted off such securities in the accompanying financial statements.
The Bank classified certain securities amounting to TL 104,473 thousands and RON 34,500,000 as financial liability at fair value through profit/loss at the initial recognition. As of 31 December 2016, the accumulated negative credit risks changes, and the negative and positive credit risk changes recognised in the income statement amounted to TL 144 thousands and TL 2,289 thousands, and TL 144 thousands and TL 722 thousands, respectively. The carrying value of the related financial liability amounted to TL 30,618 thousands and TL 105,368 thousands, and the related current period losses and gains amounted to TL 896 thousands and TL 953 thousands, respectively.
5.2.4.2 Funds provided through repurchase transactions
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Domestic Transactions | 7,268,205 | - | 12,521,178 | - |
Financial Institutions and Organizations | 7,189,589 | - | 12,474,644 | - |
Other Institutions and Organizations | 31,248 | - | 14,308 | - |
Individuals | 47,368 | - | 32,226 | - |
Foreign Transactions | 2 | - | 75 | 2,546,908 |
Financial Institutions and Organizations | - | - | - | 2,546,908 |
Other Institutions and Organizations | - | - | - | - |
Individuals | 2 | - | 75 | - |
Total | 7,268,207 | - | 12,521,253 | 2,546,908 |
5.2.4.3 Miscellaneous payables
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Payables from credit card transactions | 7,833,260 | 37,377 | 6,886,185 | 54,592 |
Other | 358,186 | 859,316 | 246,079 | 1,149,996 |
Total | 8,191,446 | 896,693 | 7,132,264 | 1,204,588 |
5.2.5 Lease payables (Net)
5.2.5.1 Financial lease payables
| Current Period | Prior Period | ||
Gross | Net | Gross | Net | |
Up to 1 Year | 16,612 | 15,406 | 8,835 | 7,947 |
1-4 Years | 1,792 | 1,686 | 3,150 | 3,021 |
More than 4 Years | - | - | - | - |
Total | 18,404 | 17,092 | 11,985 | 10,968 |
5.2.5.2 Operational lease agreements
The operational leasing agreements are signed for some branches and ATM's. The agreements are prepared annually and annual rents are paid in advance and recorded as prepaid expense in "other assets". The Bank does not have any commitments arising on the existing operational lease agreements.
5.2.6 Derivative financial liabilities held for risk management
Derivative Financial Liabilities held for Risk Management | Current Period | Prior Period | ||
TL | FC | TL | FC | |
Fair Value Hedges | 26,671 | 231,062 | 10,928 | 210,635 |
Cash Fow Hedges | - | 21,803 | - | 28,928 |
Net Foreign Investment Hedges | - | - | - | - |
Total | 26,671 | 252,865 | 10,928 | 239,563 |
5.2.7 Provisions
5.2.7.1 General provisions
| Current Period | Prior Period |
General Provision for | 3,171,163 | 3,002,057 |
Loans and Receivables in Group I | 1,713,424 | 2,298,736 |
Loans and Receivables in Group II | 869,171 | 350,733 |
Non-Cash Loans | 359,927 | 151,772 |
Others | 228,641 | 200,816 |
5.2.7.2 Provisions for foreign exchange differences on foreign currency indexed loans and financial lease receivables
| Current Period | Prior Period |
Short-Term Loans | 1,241 | 29,733 |
Medium and Long-Term Loans | 270 | 11,412 |
Total | 1,511 | 41,145 |
Foreign exchange differences on foreign currency indexed loans are netted with loans on the asset side.
5.2.7.3 Provisions for non-cash loans that are not indemnified or converted into cash
| Current Period | Prior Period |
Substandard Loans and Receivables - Limited Collectibility | 27,731 | 26,570 |
Doubtful Loans and Receivables | 22,716 | 18,417 |
Uncollectible Loans and Receivables | 84,162 | 57,122 |
Total | 134,609 | 102,109 |
5.2.7.4 Other provisions
5.2.7.4.1 General reserves for possible losses
| Current Period | Prior Period |
General Reserves for Possible Losses | 300,000 | 330,000 |
5.2.7.4.2 Other provisions
| Current Period | Prior Period |
Reserve for Employee Benefits | 679,871 | 529,537 |
Provision for Promotion Expenses of Credit Cards (*) | 95,340 | 86,809 |
Provision for Lawsuits | 53,174 | 39,530 |
Other Provisions | 179,847 | 160,022 |
Total | 1,008,232 | 815,898 |
(*) The Bank provides full allowance for the committed promotion expenses of credit cards as of the balance sheet date.
Recognized liability for defined benefit plan obligations
The Bank obtained an actuarial report dated 5 December 2016 from an independent actuary reflecting the principles and procedures on determining the application of transfer transactions in accordance with the Law and it is determined that the assets of the Plan are above the amount that will be required to be paid to transfer the obligation and the asset surplus amounts to TL 2,772,742 thousands at 31 December 2016 as details are given in the table below.
Furthermore, an actuarial report was prepared as of 31 December 2016 as per the requirements of the Law explained in Note 3.17, the accounting policies related with "employee benefits" for the benefits transferable to the SSF and as per TAS 19 for other benefits not transferable to the SSF and arising from other social rights and payments covered by the existing trust indenture of the Fund and medical benefits provided for employees. Based on the actuary's 5 December 2016 dated report, the asset surplus over the fair value of the plan assets to be used for the payment of the obligations also fully covers the benefits not transferable and still a surplus of TL 1,482,852 thousands remains as of 31 December 2016 as details are given in the table below.
The Bank's management, acting prudently, did not consider the health premium surplus amounting TL 531,665 thousands as stated above and resulted from the present value of medical benefits and health premiums transferable to SSF as of 31 December 2016. However, despite this treatment there are no excess obligation that needs to be provided against.
| Current Period | Prior Period |
Transferable Pension and Medical Benefits: | | |
Net present value of pension benefits transferable to SSF | (770,448) | (608,796) |
Net present value of medical benefits and health premiums transferable to SSF | 531,665 | 528,011 |
General administrative expenses | (39,405) | (33,702) |
Present Value of Pension and Medical Benefits Transferable to SSF (1) | (278,188) | (114,487) |
Fair Value of Plan Assets (2) | 3,050,930 | 2,522,836 |
Asset Surplus over Transferable Benefits ((2)-(1)=(3)) | 2,772,742 | 2,408,349 |
Non-Transferable Benefits: | | |
Other pension benefits | (662,751) | (592,937) |
Other medical benefits | (627,139) | (478,453) |
Total Non-Transferable Benefits (4) | 1,289,890 | (1,071,390) |
Asset Surplus over Total Benefits ((3)-(4)=(5)) | 1,482,852 | 1,336,959 |
Net Present Value of Medical Benefits and Health Premiums Transferable to SSF - but not considered acting prudently (6) |
(531,665) |
(528,011) |
Present Value of Asset Surplus/(Defined Benefit Obligation) ((5)-(6)) | 951,187 | 808,948 |
The major actuarial assumptions used in the calculation of other benefits not transferable to SSF in compliance with TAS 19 are as follows:
| Current Period | Prior Period |
% | % | |
Discount Rate (*) | 11.50 | 10.30 |
Inflation Rate (*) | 7.80 | 7.10 |
Future Real Salary Increase Rate | 1.50 | 1.50 |
Medical Cost Trend Rate | 40% above inflation | 40% above inflation |
Future Pension Increase Rate (*) | 7.80 | 7.10 |
(*) The above rates are effective rates, whereas the rates applied for the calculation differ according to the employees' years-in-service.
Assumptions regarding future mortality are based on published statistics and mortality tables. The average life expectancy of an individual retiring at age 60 is 17 for males, and at age 58 for females is 23.
5.2.8 Tax liability
5.2.8.1 Current tax liability
5.2.8.1.1 Tax liability
As of 31 December 2016, the Bank had a current tax liability of TL 94,095 thousands (31 December 2015: TL 364,223 thousands) after offsetting with prepaid taxes.
5.2.8.1.2 Taxes payable
| Current Period | Prior Period |
Corporate Taxes Payable | 94,095 | 364,223 |
Taxation on Securities Income | 122,010 | 110,161 |
Taxation on Real Estates Income | 3,752 | 3,396 |
Banking Insurance Transaction Tax | 114,846 | 96,852 |
Foreign Exchange Transaction Tax | 86 | 74 |
Value Added Tax Payable | 10,398 | 11,037 |
Others | 66,639 | 71,798 |
Total | 411,826 | 657,541 |
5.2.8.1.3 Premiums
| Current Period | Prior Period |
Social Security Premiums-Employees | 51 | 45 |
Social Security Premiums-Employer | 62 | 55 |
Bank Pension Fund Premium-Employees | 21 | 18 |
Bank Pension Fund Premium-Employer | 21 | 18 |
Pension Fund Membership Fees and Provisions-Employees | - | - |
Pension Fund Membership Fees and Provisions-Employer | - | - |
Unemployment Insurance-Employees | 1,118 | 964 |
Unemployment Insurance-Employer | 2,258 | 1,941 |
Others | 27 | 21 |
Total | 3,558 | 3,062 |
5.2.8.2 Deferred tax liability
None.
5.2.9 Liabilities for assets held for sale and assets of discontinued operations
None.
5.2.10 Subordinated debts
On 23 February 2009, the Bank obtained a subordinated debt of EUR 50 millions from Proparco (Societe de Promotion et de Participation pour la Cooperation Economique SA), a company of the French Development Agency Group with an interest of Euribor+3.5% and maturity of 12 years with a repayment option at the end of the seventh year, to finance the clean energy projects. This debt is qualified as secondary subordinated debt to be included in the supplementary capital by the BRSA in the calculation of the Bank's capital adequacy ratio in compliance with the conditions set forth in the "Regulation on Equities of Banks" issued by the BRSA and published in the Official Gazette no.26333 dated 1 November 2006.
Total amount of the debt was repaid on 31 March 2016, by exercising the call option at the end of 7-year period.
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Domestic Banks | - | - | - | - |
Domestic Other Institutions | - | - | - | - |
Foreign Banks | - | - | - | - |
Foreign Other Institutions | - | - | - | 159,792 |
Total | - | - | - | 159,792 |
5.2.11 Shareholders' equity
5.2.11.1 Paid-in capital
| Current Period | Prior Period |
Common Shares | 4,200,000 | 4,200,000 |
Preference Shares | - | - |
5.2.11.2 Registered share capital system
Capital | Paid-in Capital | Ceiling per Registered Share Capital |
Registered Shares | 4,200,000 | 10,000,000 |
5.2.11.3 Capital increases in current period
None.
5.2.11.4 Capital increases from capital reserves in current period
None.
5.2.11.5 Capital commitments for current and future financial periods
None.
5.2.11.6 Possible effect of estimations made for the parent bank's revenues, profitability and liquidity on equity considering prior period indicators and uncertainties
None.
5.2.11.7 Information on privileges given to stocks representing the capital
None.
5.2.11.8 Securities value increase fund
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Investments in Associates, Affiliates and Joint-Ventures | 1,115,043 | 18,255 | 681,119 | (22,224) |
Valuation difference | 42,879 | 18,255 | 73,280 | (22,224) |
Exchange rate difference | 1,072,164 | - | 607,839 | - |
Securities Available-for-Sale | (484,665) | (26,490) | (427,154) | 210,219 |
Valuation difference | (484,665) | (26,490) | (427,154) | 210,219 |
Exchange rate difference | - | - | - | - |
Total | 630,378 | (8,235) | 253,965 | 187,995 |
5.2.11.9 Revaluation surplus
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Movables | - | - | - | - |
Real Estates | 1,450,022 | - | 1,458,644 | - |
Gain on Sale of Investments in Associates and Affiliates and Real Estates allocated for Capital Increases | 176,415 | - | 173,263 | - |
Revaluation Surplus on Leasehold Improvements | - | - | - | - |
5.2.11.10 Bonus shares of associates, affiliates and joint-ventures
| Current Period | Prior Period |
Garanti Yatırım Menkul Değerler AŞ | 942 | 942 |
Kredi Kartları Bürosu AŞ | 481 | 481 |
Garanti Ödeme Sistemleri AŞ | 401 | 401 |
Tat Konserve AŞ | 36 | 36 |
Doğuş Gayrimenkul Yatırım Ortaklığı AŞ | 22 | 22 |
Yatırım Finansman Menkul Değerler AŞ | 9 | 9 |
Total | 1,891 | 1,891 |
5.2.11.11 Legal reserves
| Current Period | Prior Period |
I. Legal Reserve | 960,320 | 958,189 |
II. Legal Reserve | 245,840 | 210,140 |
Special Reserves | - | - |
5.2.11.12 Extraordinary reserves
| Current Period | Prior Period |
Legal reserves that was allocated to be in compliance with the decisions made on the Annual General Assembly | 21,972,914 | 19,159,612 |
Retained Earnings | - | - |
Accumulated Losses | - | - |
Exchange Rate Difference on Foreign Currency Capital | - | - |
5.2.12 Accrued interest and expenses
The details of accrued interest and expenses allocated to the related items on the liability side of the balance sheet are as follows:
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Deposits | 355,115 | 215,921 | 347,088 | 159,767 |
Funds Borrowed | 87,549 | 156,634 | 91,800 | 102,171 |
Interbank Money Markets | 6,092 | - | 7,314 | 9,940 |
Other Accruals | 110,766 | 758,635 | 63,557 | 704,653 |
Total | 559,522 | 1,131,190 | 509,759 | 976,531 |
5.3 Off-Balance Sheet Items
5.3.1 Off-balance sheet contingencies
5.3.1.1 Irrevocable credit commitments
The Bank has term asset purchase and sale commitments of TL 3,281,772 thousands (31 December 2015: TL 3,060,328 thousands), commitments for cheque payments of TL 3,555,087 thousands (31 December 2015: TL 3,063,159 thousands) and commitments for credit card limits of TL 27,849,612 thousands (31 December 2015: TL 26,826,339 thousands).
5.3.1.2 Possible losses, commitments and contingencies resulted from off-balance sheet items
| Current Period | Prior Period |
Letters of Guarantee in Foreign Currency | 20,378,358 | 17,332,578 |
Letters of Guarantee in TL | 17,101,636 | 14,826,457 |
Letters of Credit | 15,010,812 | 14,286,342 |
Bills of Exchange and Acceptances | 2,127,334 | 1,538,069 |
Prefinancings | - | - |
Other Guarantees | 155,016 | 109,206 |
Total | 54,773,156 | 48,092,652 |
A specific provision of 134,609 TL thousands (31 December 2015: TL 102,109 thousands) is made for unliquidated non-cash loans of TL 355,861 thousands (31 December 2015: TL 313,985 thousands) recorded under the off-balance sheet items in the accompanying financial statements.
The detailed information for commitments, guarantees and sureties are provided under the statement of "off-balance sheet items".
5.3.1.3 Non-cash loans
| Current Period | Prior Period |
Non-Cash Loans against Cash Risks | 5,128,893 | 4,157,201 |
With Original Maturity of 1 Year or Less | 331,380 | 454,207 |
With Original Maturity of More Than 1 Year | 4,797,513 | 3,702,994 |
Other Non-Cash Loans | 49,644,263 | 43,935,451 |
Total | 54,773,156 | 48,092,652 |
5.3.1.4 Sectoral risk concentration of non-cash loans
| Current Period | Prior Period | ||||||
TL | (%) | FC | (%) | TL | (%) | FC | (%) | |
Agriculture | 70,323 | 0.41 | 35,294 | 0.10 | 59,203 | 0.40 | 20,610 | 0.06 |
Farming and Stockbreeding | 59,983 | 0.35 | 24,619 | 0.07 | 53,926 | 0.36 | 14,859 | 0.04 |
Forestry | 8,973 | 0.05 | 2,810 | 0.01 | 3,897 | 0.03 | 5,066 | 0.02 |
Fishery | 1,367 | 0.01 | 7,865 | 0.02 | 1,380 | 0.01 | 685 | - |
Manufacturing | 4,388,090 | 25.62 | 17,478,679 | 46.43 | 4,251,238 | 28.61 | 16,122,283 | 48.51 |
Mining and Quarrying | 194,627 | 1.14 | 192,037 | 0.51 | 151,428 | 1.02 | 164,179 | 0.49 |
Production | 2,432,210 | 14.20 | 12,714,045 | 33.77 | 2,450,646 | 16.49 | 11,100,367 | 33.40 |
Electricity, Gas, Water | 1,761,253 | 10.28 | 4,572,597 | 12.15 | 1,649,164 | 11.10 | 4,857,737 | 14.62 |
Construction | 2,767,922 | 16.16 | 4,129,403 | 10.97 | 2,091,782 | 14.08 | 3,665,678 | 11.03 |
Services | 8,578,393 | 50.07 | 13,853,148 | 36.80 | 7,313,986 | 49.22 | 12,169,678 | 36.61 |
Wholesale and Retail Trade | 5,889,557 | 34.38 | 8,725,717 | 23.18 | 5,223,467 | 35.16 | 8,053,245 | 24.23 |
Accommodation and Dining | 236,345 | 1.38 | 297,645 | 0.79 | 297,037 | 2.00 | 215,078 | 0.65 |
Transportation and Telecommunication | 601,547 | 3.51 | 1,649,457 | 4.38 | 501,237 | 3.37 | 1,047,718 | 3.15 |
Financial Institutions | 1,442,429 | 8.42 | 2,928,416 | 7.78 | 930,766 | 6.26 | 2,593,893 | 7.80 |
Real Estate and Rental Services | 251,658 | 1.47 | 221,317 | 0.59 | 262,149 | 1.76 | 236,803 | 0.71 |
Professional Services | - | - | - | - | - | - | - | - |
Educational Services | 24,350 | 0.14 | 3,531 | 0.01 | 22,140 | 0.15 | 10,322 | 0.03 |
Health and Social Services | 132,507 | 0.77 | 27,065 | 0.07 | 77,190 | 0.52 | 12,619 | 0.04 |
Others | 1,324,754 | 7.74 | 2,147,150 | 5.70 | 1,142,116 | 7.69 | 1,256,078 | 3.79 |
Total | 17,129,482 | 100.00 | 37,643,674 | 100.00 | 14,858,325 | 100.00 | 33,234,327 | 100.00 |
5.3.1.5 Non-cash loans classified under Group I and II
| Group I | Group II | ||
Current Period | TL | FC | TL | FC |
Non-Cash Loans | 16,912,826 | 36,802,927 | 216,656 | 840,747 |
Letters of Guarantee | 16,884,980 | 19,713,157 | 216,656 | 665,201 |
Bills of Exchange and Bank Acceptances | 27,846 | 2,099,488 | - | - |
Letters of Credit | - | 14,835,266 | - | 175,546 |
Endorsements | - | - | - | - |
Underwriting Commitments | - | - | - | - |
Factoring Related Guarantees | - | - | - | - |
Other Guarantees and Surities | - | 155,016 | - | - |
| Group I | Group II | ||
Prior Period | TL | FC | TL | FC |
Non-Cash Loans | 14,710,093 | 32,526,428 | 148,232 | 707,899 |
Letters of Guarantee | 14,678,225 | 16,793,372 | 148,232 | 539,206 |
Bills of Exchange and Bank Acceptances | 20,793 | 1,515,117 | - | 2,159 |
Letters of Credit | 11,075 | 14,108,733 | - | 166,534 |
Endorsements | - | - | - | - |
Underwriting Commitments | - | - | - | - |
Factoring Related Guarantees | - | - | - | - |
Other Guarantees and Surities | - | 109,206 | - | - |
5.3.2 Financial derivative instruments
Current Period | Up to 1 Month | 1-3 Months | 3-12 Months | 1-5 Years | 5 Years and Over | Total |
Derivative Financial Instruments held for Risk Management | | | | | | |
A. Total Derivative Financial Instruments held for Risk Management | - | 80,000 | 1,500,547 | 19,041,969 | 13,912,929 | 34,535,445 |
Fair Value Hedges | - | 80,000 | 500,547 | 9,119,275 | 9,590,333 | 19,290,155 |
Cash Flow Hedges | - | - | 1,000,000 | 9,922,694 | 4,322,596 | 15,245,290 |
Net Foreign Investment Hedges | - | - | - | - | - | - |
Trading Derivatives | | | | | | |
Foreign Currency related Derivative Transactions (I) | 112,982,256 | 45,942,375 | 55,050,292 | 8,490,852 | - | 222,465,775 |
Currency Forwards-Purchases | 7,727,483 | 2,486,686 | 2,824,657 | 772,388 | - | 13,811,214 |
Currency Forwards-Sales | 7,712,360 | 2,427,200 | 2,875,583 | 785,068 | - | 13,800,211 |
Currency Swaps-Purchases | 40,085,771 | 15,670,209 | 16,004,366 | 2,189,473 | - | 73,949,819 |
Currency Swaps-Sales | 39,802,745 | 15,711,078 | 15,823,773 | 2,378,007 | - | 73,715,603 |
Currency Options-Purchases | 8,663,673 | 4,678,793 | 8,465,924 | 1,143,233 | - | 22,951,623 |
Currency Options-Sales | 8,990,224 | 4,828,242 | 9,042,572 | 1,222,683 | - | 24,083,721 |
Currency Futures-Purchases | - | 72,411 | 8,720 | - | - | 81,131 |
Currency Futures-Sales | - | 67,756 | 4,697 | - | - | 72,453 |
Interest Rate related Derivative Transactions (II) | 10,624 | 117,305 | 6,146,838 | 17,917,866 | 18,424,620 | 42,617,253 |
Interest Rate Swaps-Purchases | 42 | 337 | 3,073,419 | 6,238,093 | 8,547,633 | 17,859,524 |
Interest Rate Swaps-Sales | 42 | 337 | 3,073,419 | 6,238,093 | 8,547,633 | 17,859,524 |
Interest Rate Options-Purchases | - | - | - | 4,598,560 | 1,329,354 | 5,927,914 |
Interest Rate Options-Sales | - | - | - | 843,120 | - | 843,120 |
Securities Options-Purchases | 5,270 | 8,255 | - | - | - | 13,525 |
Securities Options-Sales | 5,270 | 8,255 | - | - | - | 13,525 |
Interest Rate Futures-Purchases | - | - | - | - | - | - |
Interest Rate Futures-Sales | - | 100,121 | - | - | - | 100,121 |
Other Trading Derivatives (III) | 170,236 | 672,615 | 693,095 | 1,945,734 | 5,269,501 | 8,751,181 |
B. Total Trading Derivatives (I+II+III) | 113,163,116 | 46,732,295 | 61,890,225 | 28,354,452 | 23,694,121 | 273,834,209 |
Total Derivative Transactions (A+B) | 113,163,116 | 46,812,295 | 63,390,772 | 47,396,421 | 37,607,050 | 308,369,654 |
Prior Period | Up to 1 Month | 1-3 Months | 3-12 Months | 1-5 Years | 5 Years and Over | Total |
Derivative Financial Instruments held for Risk Management | | | | | | |
A. Total Derivative Financial Instruments held for Risk Management | - | 800,000 | 1,482,385 | 12,130,687 | 9,657,969 | 24,071,041 |
Fair Value Hedges | - | - | 2,000 | 4,457,333 | 8,246,516 | 12,705,849 |
Cash Flow Hedges | - | 800,000 | 1,480,385 | 7,673,354 | 1,411,453 | 11,365,192 |
Net Foreign Investment Hedges | - | - | - | - | - | - |
Trading Derivatives | | | | | | |
Foreign Currency related Derivative Transactions (I) | 75,660,824 | 33,923,846 | 60,404,687 | 13,344,189 | - | 183,333,546 |
Currency Forwards-Purchases | 6,316,719 | 4,168,863 | 4,708,540 | 1,376,019 | - | 16,570,141 |
Currency Forwards-Sales | 5,710,864 | 4,289,908 | 5,041,453 | 1,464,935 | - | 16,507,160 |
Currency Swaps-Purchases | 25,553,116 | 2,474,359 | 5,021,481 | 1,631,533 | - | 34,680,489 |
Currency Swaps-Sales | 22,029,744 | 2,482,660 | 5,585,839 | 1,711,599 | - | 31,809,842 |
Currency Options-Purchases | 7,907,588 | 10,018,035 | 18,935,949 | 3,445,881 | - | 40,307,453 |
Currency Options-Sales | 8,142,793 | 10,486,904 | 20,910,640 | 3,629,918 | - | 43,170,255 |
Currency Futures-Purchases | - | 3,117 | 4,311 | - | - | 7,428 |
Currency Futures-Sales | - | - | 196,474 | 84,304 | - | 280,778 |
Interest Rate related Derivative Transactions (II) | 140 | 200,000 | 5,632,931 | 17,841,609 | 11,031,016 | 34,705,696 |
Interest Rate Swaps-Purchases | 70 | 100,000 | 1,624,844 | 7,244,531 | 5,253,157 | 14,222,602 |
Interest Rate Swaps-Sales | 70 | 100,000 | 1,624,844 | 7,244,531 | 5,253,157 | 14,222,602 |
Interest Rate Options-Purchases | - | - | 2,383,243 | 3,352,547 | 524,702 | 6,260,492 |
Interest Rate Options-Sales | - | - | - | - | - | - |
Securities Options-Purchases | - | - | - | - | - | - |
Securities Options-Sales | - | - | - | - | - | - |
Interest Rate Futures-Purchases | - | - | - | - | - | - |
Interest Rate Futures-Sales | - | - | - | - | - | - |
Other Trading Derivatives (III) | 4,694,860 | 459,682 | 672,330 | 1,613,206 | 4,362,000 | 11,802,078 |
B. Total Trading Derivatives (I+II+III) | 80,355,824 | 34,583,528 | 66,709,948 | 32,799,004 | 15,393,016 | 229,841,320 |
Total Derivative Transactions (A+B) | 80,355,824 | 35,383,528 | 68,192,333 | 44,929,691 | 25,050,985 | 253,912,361 |
5.3.3 Credit derivatives and risk exposures on credit derivatives
As of 31 December 2016, in the Bank's "other irrevocable commitments", there are commitments for "credit linked notes" with a total face value of USD 25,000,000 (31 December 2015: USD 125,000,000).
As of 31 December 2016, there are total return swaps of the Bank with a total face value of USD 2,000,000,000 (31 December 2015: USD 2,000,000,000) classified under "other derivative financial instruments", where the Bank is on the selling side of the protection.
5.3.4 Contingent liabilities and assets
The Bank made a total provision amounting to TL 53,174 thousands (31 December 2015: TL 39,530 thousands) for the lawsuits filed by various customers and institutions against the Bank which are likely to occur and for which cash outflow might be necessary, and disclosed it under Note 5.2.7.4.2, other provisions. The Bank has various other lawsuits which are unlikely to occur and for which cash outflow is not expected to incur.
It is possible that the Bank may be required to provide additional collateral for the derivative transactions involved due to changes in certain financials indicators such as CDS levels, currency exchange rates, interest rates etc. As of 31 December 2016, there was no payment made related with such contingent liabilities.
5.3.5 Services rendered on behalf of third parties
The Bank acts as an investment agent for banking transactions on behalf of its customers and provides custody services. Such transactions are followed under off-balance sheet accounts.
5.4 Income Statement
5.4.1 Interest income
5.4.1.1 Interest income from loans (*)
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Short-term loans | 5,061,808 | 170,849 | 4,183,325 | 159,098 |
Medium and long-term loans | 8,295,879 | 3,186,033 | 6,413,920 | 2,840,011 |
Loans under follow-up | 68,875 | - | 51,171 | 278 |
Premiums Received from Resource Utilization Support Fund | - | - | - | - |
Total | 13,426,562 | 3,356,882 | 10,648,416 | 2,999,387 |
(*) Includes also the fee and commission income on cash loans
5.4.1.2 Interest income from banks
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Central Bank of Turkey | - | 16,194 | - | 3,308 |
Domestic Banks | 16,929 | 410 | 30,032 | 410 |
Foreign Banks | 2,374 | 53,629 | 6,382 | 33,280 |
Foreign Head Offices and Branches | - | - | - | - |
Total | 19,303 | 70,233 | 36,414 | 36,998 |
5.4.1.3 Interest income from securities portfolio
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Financial Assets Held for Trading | 15,517 | 1,944 | 10,443 | 4,888 |
Financial Assets Valued at Fair Value through Profit or Loss | - | - | - | - |
Financial Assets Available-for-Sale | 1,799,474 | 104,163 | 1,728,714 | 84,849 |
Investments Held-to-Maturity | 1,110,089 | 546,080 | 1,128,760 | 500,042 |
Total | 2,925,080 | 652,187 | 2,867,917 | 589,779 |
As disclosed in the accounting policies, the Bank values CPI-indexed government bonds in its securities portfolio according to the reference index on the issue date and the index that is calculated according to the expected inflation rate. The inflation rate used during the valuation is being updated during the year when it is considered necessary. As of 31 December 2016, the valuation of such securities was made according to annual inflation rate as of balance sheet date.
5.4.1.4 Interest income received from associates and affiliates
| Current Period | Prior Period |
Interest Received from Investments in Associates and Affiliates | 38,427 | 77,954 |
5.4.2 Interest Expenses
5.4.2.1 Interest expenses on funds borrowed (*)
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Banks | 223,254 | 422,426 | 313,544 | 376,344 |
Central Bank of Turkey | - | - | - | 206 |
Domestic Banks | 20,278 | 6,816 | 15,541 | 6,846 |
Foreign Banks | 202,976 | 415,610 | 298,003 | 369,292 |
Foreign Head Offices and Branches | - | - | - | - |
Other Institutions | - | 299,374 | - | 245,691 |
Total | 223,254 | 721,800 | 313,544 | 622,035 |
(*) Includes also the fee and commission expenses on borrowings
5.4.2.2 Interest expenses paid to associates and affiliates
| Current Period | Prior Period |
Interest Paid to Investments in Associates and Affiliates | 81,420 | 61,043 |
5.4.2.3 Interest expenses on securities issued
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Interest Paid on Securities Issued | 432,604 | 531,696 | 329,036 | 507,903 |
5.4.2.4 Maturity structure of interest expense on deposits
Current Period |
Demand Deposits | Time Deposits | Total | |||||
Account Description
| Up to 1 Month | 1-3 Months | 3-6 Months | 6-12 Months | 1 Year and Over | Accumulating Deposit Accounts | ||
Turkish Lira | | | | | | | | |
Bank Deposits | 1,093 | 251,424 | - | - | - | - | - | 252,517 |
Saving Deposits | 45 | 244,786 | 3,700,535 | 87,873 | 39,154 | 48,930 | - | 4,121,323 |
Public Sector Deposits | - | 890 | 4,680 | 11 | 86 | 2 | - | 5,669 |
Commercial Deposits | 42 | 327,543 | 599,974 | 47,201 | 24,968 | 74,107 | - | 1,073,835 |
Other | 9 | 12,739 | 81,804 | 11,671 | 65,656 | 29,683 | - | 201,562 |
"7 Days Notice" Deposits | - | - | - | - | - | - | - | - |
Total TL | 1,189 | 837,382 | 4,386,993 | 146,756 | 129,864 | 152,722 | - | 5,654,906 |
Foreign Currency | | | | | | | | - |
Foreign Currency Deposits | 240 | 59,078 | 722,519 | 46,276 | 97,238 | 285,142 | 825 | 1,211,318 |
Bank Deposits | - | 15,601 | - | - | - | - | - | 15,601 |
"7 Days Notice" Deposits | - | - | - | - | - | - | - | - |
Precious Metal Deposits | - | - | 69 | 11 | 32 | 1,382 | - | 1,494 |
Total FC | 240 | 74,679 | 722,588 | 46,287 | 97,270 | 286,524 | 825 | 1,228,413 |
Grand Total | 1,429 | 912,061 | 5,109,581 | 193,043 | 227,134 | 439,246 | 825 | 6,883,319 |
Prior Period |
Demand Deposits | Time Deposits | Total | |||||
Account Description | Up to 1 Month | 1-3 Months | 3-6 Months | 6-12 Months | 1 Year and Over | Accumulating Deposit Accounts | ||
Turkish Lira | | | | | | | | |
Bank Deposits | 804 | 119,745 | - | - | - | - | - | 120,549 |
Saving Deposits | 50 | 302,360 | 3,022,922 | 112,344 | 69,885 | 52,452 | - | 3,560,013 |
Public Sector Deposits | - | 610 | 2,627 | 9 | 7 | 2 | - | 3,255 |
Commercial Deposits | 15 | 295,937 | 491,563 | 19,507 | 34,160 | 44,989 | - | 886,171 |
Other | 11 | 11,876 | 90,201 | 5,619 | 4,622 | 38,832 | - | 151,161 |
"7 Days Notice" Deposits | - | - | - | - | - | - | - | - |
Total TL | 880 | 730,528 | 3,607,313 | 137,479 | 108,674 | 136,275 | - | 4,721,149 |
Foreign Currency | | | | | | | | - |
Foreign Currency Deposits | 1,184 | 49,125 | 528,599 | 69,531 | 98,639 | 182,411 | 884 | 930,373 |
Bank Deposits | - | 33,034 | - | - | - | - | - | 33,034 |
"7 Days Notice" Deposits | - | - | - | - | - | - | - | - |
Precious Metal Deposits | - | - | 2 | - | - | 1,102 | - | 1,104 |
Total FC | 1,184 | 82,159 | 528,601 | 69,531 | 98,639 | 183,513 | 884 | 964,511 |
Grand Total | 2,064 | 812,687 | 4,135,914 | 207,010 | 207,313 | 319,788 | 884 | 5,685,660 |
5.4.2.5 Interest expense on repurchase agreements
| Current Period | Prior Period | ||
TL | FC | TL | FC | |
Interest Paid on Repurchase Agreements | 969,896 | 28,657 | 647,663 | 53,228 |
5.4.2.6 Financial lease expenses
| Current Period | Prior Period |
Financial Lease Expenses | 2,132 | 746 |
5.4.2.7 Interest expenses on factoring payables
None.
5.4.3 Dividend income
| Current Period | Prior Period |
Trading Financial Assets | - | - |
Financial Assets Valued at Fair Value through Profit or Loss | - | - |
Financial Assets Available-for-Sale | 966 | 722 |
Others | 5,936 | 4,380 |
Total | 6,902 | 5,102 |
5.4.4 Trading income/losses (Net)
| Current Period | Prior Period |
Income | 75,155,487 | 95,127,805 |
Trading Account Income | 564,189 | 608,134 |
Gains from Derivative Financial Instruments | 10,269,269 | 11,342,904 |
Foreign Exchange Gains | 64,322,029 | 83,176,767 |
Losses (-) | 75,946,728 | 96,203,423 |
Trading Account Losses | 274,162 | 93,575 |
Losses from Derivative Financial Instruments | 11,011,854 | 13,574,589 |
Foreign Exchange Losses | 64,660,712 | 82,535,259 |
Total | (791,241) | (1,075,618) |
TL 3,262,341 thousands (31 December 2015: TL 1,472,398 thousands) of foreign exchange gains and TL 3,879,841 thousands (31 December 2015: TL 1,559,011 thousands) of foreign exchange losses are resulted from the exchange rate changes of derivative financial transactions.
The Bank enters into interest rate swap agreements in order to hedge the change in fair values of its fixed rate financial instruments due to fluctuations in market interest rates. In this respect, the Bank applied fair value hedge accounting for the fixed rate eurobonds issued in 2011 with a total face value of USD 500,000,000, maturity of 10 years and maturity date of 20 April 2021 which were priced at 6.375% originally and had a coupon rate of 6.25%, by designating interest rate swaps with the same face values and terms. In June 2012, the Bank ceased to apply hedge accounting and accordingly fair value calculations for these bonds. The accumulated fair value differences incurred starting from the date of hedge accounting up to the date on which it was ceased, are amortized as per the effective interest-rate method in compliance with TAS 39.
The Bank also enters into interest rate and cross currency swap agreements in order to hedge the change in cash flows of floating rate financial instruments due to fluctuations in market interest rates. In this respect, the Bank applied cash flow hedge accounting for funds borrowed amounting to USD 79,827,027 and EUR 39,473,684 securitization borrowings amounting to USD 102,083,335 and EUR 154,289,472 by designating cross currency swaps with the same face values and terms, and eurobonds with a total nominal value of USD 10,000,000, the collateralised borrowings amounting to TL 500,000 thousands and USD 250,000,000, borrowings amounting to USD 650,000,000, securitizations amounting to USD 500,000,000 and deposits amounting to USD 300,000,000 by designating interest rate swaps with the same face values and terms. Accordingly, in the current period, gains of TL 46,482 thousands (31 December 2015: TL 70,700 thousands) and TL 39,553 thousands (31 December 2015: gains of TL 70,700 thousands and TL 4,946 thousands) resulting from cross currency and interest rate swap agreements were recognised under shareholders' equity, respectively.
The Bank also applied fair value hedge accounting for its fixed-rate loans with a total principal of TL 2,648,197 thousands and USD 1,089,994,701 and EUR 150,619,549, for its fixed-rate loans with a total principal of RON 98,288,042, for its bonds with a total face value of TL 1,005,000 thousands and USD 265,400,000 and fixed-rate coupons by designating interest rate swaps and cross currency swaps with the same face values and terms. Accordingly, in the current period, a gain of TL 492 thousands (31 December 2015: TL 65,397 thousands) and a loss of TL 14,515 thousands (31 December 2015: TL 48,755 thousands) resulted from the related fair value calculations for the hedged loans and bonds were accounted for under net trading income/losses in the income statement, respectively.
In addition, the Bank also entered into cross currency swap agreements in order to hedge its fixed-rate bonds issued for a total principal value of AUD 175,000,000 and, RON 85,500,000 with the same face values and terms. Accordingly, in the current period, a loss of TL 13,071 thousands (31 December 2015: TL 13,669 thousands) resulted from the fair value changes of the securities issued and funds borrowed subject to hedge accounting were accounted for under trading income/losses in the income statement.
5.4.5 Other operating income
The items under "other operating income" generally consists of collection or reversals of prior year provisions, banking services related costs recharged to customers, fair value increase of investment property and income on custody services.
As of 21 June 2016, the acquisition of Visa Europe Ltd. by Visa Inc. has been completed. In acquisition, the Bank has sold its one share in Visa Europe Ltd. with a nominal of EUR 10.00 for a consideration of EUR 58,422,751 in cash and 21,215 in "C Type Visa Inc." shares. The income generated from the sale share is recognized under the "Other Operating Income".
In the current period, a part of non-performing receivables of the Bank amounting to TL 1,059,931 thousands were sold for a consideration of TL 79,774 thousands. Considering the related provision of TL 1,058,459 thousands made in the financial statements, a gain of TL 78,276 thousands is recognized under "Other Operating Income".
5.4.6 Provision for losses on loans or other receivables
| Current Period | Prior Period |
Specific Provisions for Loans and Other Receivables | 2,366,782 | 1,560,847 |
Loans and Receivables in Group III | 420,692 | 599,593 |
Loans and Receivables in Group IV | 1,127,274 | 579,183 |
Loans and Receivables in Group V | 818,816 | 382,071 |
General Provisions | 161,626 | 562,604 |
Provision for Possible Losses | 100,000 | - |
Impairment Losses on Securities | 19 | 5,112 |
Financial Assets at Fair Value through Profit or Loss | 19 | 5,112 |
Financial Assets Available-for-Sale | - | - |
Impairment Losses on Associates, Affiliates and Investments Held-to-Maturity | - | - |
Associates | - | - |
Affiliates | - | - |
Joint Ventures | - | - |
Investments Held-to-Maturity | - | - |
Others | 186,437 | 89,631 |
Total | 2,814,864 | 2,218,194 |
5.4.7 Other operating expenses
| Current Period | Prior Period |
Personnel Costs | 2,466,135 | 2,215,481 |
Reserve for Employee Termination Benefits | 37,077 | 38,820 |
Defined Benefit Obligation | - | - |
Impairment Losses on Tangible Assets | - | 55,541 |
Depreciation Expenses of Tangible Assets | 212,422 | 190,476 |
Impairment Losses on Intangible Assets | - | - |
Impairment Losses on Goodwill | - | - |
Amortisation Expenses of Intangible Assets | 52,994 | 37,054 |
Impairment Losses on Investments Accounted under Equity Method | - | - |
Impairment Losses on Assets to be Disposed | 2,820 | 1,792 |
Depreciation Expenses of Assets to be Disposed | 8,831 | 5,097 |
Impairment Losses on Assets Held for Sale | - | - |
Other Operating Expenses | 2,638,821 | 2,510,202 |
Operational Lease related Expenses | 391,615 | 347,498 |
Repair and Maintenance Expenses | 58,260 | 60,144 |
Advertisement Expenses | 178,677 | 150,743 |
Other Expenses (*) | 2,010,269 | 1,951,817 |
Loss on Sale of Assets | 1,494 | 3,241 |
Others (**) | 697,944 | 825,597 |
Total | 6,118,538 | 5,883,301 |
(*) Includes lawsuits, execution and other legal expenses beared by the Bank, of fees and commissions income recognized in prior years but reimbursed, in the amount of TL 56,209 thousands (31 December 2015: TL 55,340 thousands), as per the decision of the Turkish Competition Board or the related courts.
(**) Includes repayments, by the Bank in the current period, of fees and commissions income recognised in prior years in the amount of TL 110,146 thousands (31 December 2015: TL 254,480 thousands), as per the decision of the Turkish Competition Board or the related courts.
5.4.8 Information on profit/loss before taxes from continued and discontinued operations
The profit before taxes includes a net interest income of TL 11,096,942 thousands (31 December 2015: TL 9,241,333 thousands), a net fees and commissions income of TL 3,151,738 thousands (31 December 2015: TL 2,922,551 thousands) and operating expenses of TL 6,118,538 thousands (31 December 2015: TL 5,883,301 thousands). The Bank's profit before taxes realized at TL 6,293,438 thousands (31 December 2015: TL 4,038,877 thousands) increasing by 46.06% as compared to prior year.
5.4.9 Information on provision for taxes from continued and discontinued operations
As of 31 December 2016, the Bank recorded a tax charge of TL 884,471 thousands (31 December 2015: TL 728,172 thousands) and a deferred tax expense of TL 338,418 thousands (31 December 2015: TL 174,198 thousands).
Deferred tax benefit/charge on timing differences:
Deferred tax benefit/(charge) on timing differences | Current Period | Prior Period |
Increase in tax deductable timing differences (+) | 59,516 | 106,758 |
Decrease in tax deductable timing differences (-) | (240,479) | (249,002) |
Increase in taxable timing differences (-) | (169,619) | (87,954) |
Decrease in taxable timing differences (+) | 12,164 | 56,000 |
Total | (338,418) | (174,198) |
Deferred tax benefit/charge in the income statement arising on timing differences, tax losses and tax deductions and exemptions:
Deferred tax benefit/(charge) arising on timing differences, tax losses and tax deductions and exemptions | Current Period | Prior Period |
Increase/(decrease) in tax deductable timing differences (net) | (180,963) | (142,244) |
Increase/(decrease) in taxable timing differences (net) | (157,455) | (31,954) |
Increase/(decrease) in tax losses (net) | - | - |
Increase/(decrease) in tax deductions and exemptions (net) | - | - |
Total | (338,418) | (174,198) |
5.4.10 Net operating profit/loss after taxes including net profit/loss from discontinued operations
None.
5.4.11 Net profit/loss
5.4.11.1 Any further explanation on operating results needed for better understanding of the Bank's performance
None.
5.4.11.2 Any changes in estimations that might have a material effect on current and subsequent period results
None.
5.4.12 Components of other items in income statement
Other items do not exceed 10% of the total of income statement.
5.5 Statement of Changes in Shareholders' Equity
5.5.1 Any increases arising from application of accounting for financial instruments
5.5.1.1 Increases from valuation of financial assets available-for-sale
None.
5.5.1.2 Increases due to cash flow hedges
The Bank enters into swap contracts to convert variable interest rates on its borrowings to fixed interest rates for cash flow hedging purposes. After netting with the related deferred tax effect, an increase of TL 9,473 thousands (31 December 2015: TL 65,618 thousands) is presented in the shareholders' equity for such hedges assessed as effective.
5.5.1.3 Reconciliation of foreign exchange differences at beginning and end of current period
An increase of TL 497,265 thousands (31 December 2015: TL 290,260 thousands) that was resulted from the foreign currency translation of the Bank, is presented under translation differences in the shareholders' equity
5.5.2 Any decreases arising from application of accounting for financial instruments
5.5.2.1 Decreases from valuation of financial assets available-for-sale
As of 31 December 2016, a decrease of TL 135,618 thousands (31 December 2015: TL 294,128 thousands) resulted from the revaluation of financial assets available-for-sale at fair value after being netted with the related deferred tax liability effect and a gain of TL 158,603 thousands (31 December 2015: TL 62,612 thousands) that was transferred to the income statement from "securities value increase fund" are presented as the current period movements in securities value increase fund in the statement of changes in shareholders' equity.
5.5.2.2 Decreases due to cash flow hedges
None.
5.5.3 Transfers to legal reserves
| Current Period | Prior Period |
Transfers to Legal Reserves from Prior Year Profits | 35,700 | 35,700 |
Transfers to Extraordinary Reserves from Prior Year Profits | 2,799,084 | 3,039,465 |
5.5.4 Issuance of share certificates
Please refer to Note 5.2.11.3.
5.5.5 Effects of prior years' corrections to beginning balances of current period
Please refer to Note 3.24.
5.5.6 Compensation of prior period losses
None.
5.6 Statement of Cash Flows
5.6.1 Disclosures for "other" items and "effect of change in foreign currency rates cash and cash equivalents" in statement of cash flows
The net cash inflow arising from banking operations amount to TL 2,849,403 thousands (31 December 2015: net cash inflow of TL 1,903,517 thousands). TL 1,920,647 thousands (31 December 2015: TL 1,899,696 thousands) of this amount is generated from the cash outflows resulted from the change in operating assets and liabilities and TL 4,770,050 thousands (31 December 2015: TL 3,803,213 thousands) from the cash inflows resulted from operating profit. The "net inrease/(decrease) in other liabilities" under the changes in operating assets and liabilities is resulted from the changes in the funds obtained through repurchase agreements, miscellaneous payables, other external funding payables and taxes, duties and premiums payables and amounts to TL 170,892 thousands (31 December 2015: TL 2,807,029 thousands). The "others" item under operating income composes of fees and commissions paid, foreign exchange gains, other operating income and other operating expenses excluding employee costs, and amounts to TL 3,557,507 thousands (31 December 2015: TL 3,455,065 thousands).
The net cash outflows from financing activities is TL 305,466 thousands (31 December 2015: a net inflows of TL 243,904 thousands).
The effect of changes in foreign exchange rates on cash and cash equivalents includes the foreign exchange differences resulted from the translations of cash and cash equivalents in foreign currencies into TL at the exchange rates prevailing at the beginning and end of the year, and amounts to TL 762,550 thousands (31 December 2015: TL 640,544 thousands).
5.6.2 Cash outflows from acquisition of associates, subsidiaries and joint-ventures
Please refer to Note 5.1.8.2 of investments in subsidiaries.
5.6.3 Cash inflows from disposal of associates, subsidiaries and joint-ventures
None.
5.6.4 Cash and cash equivalents at beginning of period
| Current Period | Prior Period |
Cash on Hand | 2,064,018 | 1,678,527 |
Cash in TL | 1,313,068 | 1,089,201 |
Cash in Foreign Currency | 750,950 | 589,326 |
Cash Equivalents | 6,814,100 | 5,907,341 |
Other | 6,814,100 | 5,907,341 |
TOTAL | 8,878,118 | 7,585,868 |
5.6.5 Cash and cash equivalents at end of period
| Current Period | Prior Period |
Cash on Hand | 2,039,563 | 2,064,018 |
Cash in TL | 1,357,688 | 1,313,068 |
Cash in Foreign Currency | 681,875 | 750,950 |
Cash Equivalents | 10,972,014 | 6,814,100 |
Other | 10,972,014 | 6,814,100 |
TOTAL | 13,011,577 | 8,878,118 |
5.6.6 Restricted cash and cash equivalents due to legal requirements or other reasons
The placements at foreign banks include blocked accounts amounting TL 7,439,697 thousands (31 December 2015: TL 7,344,666 thousands) of which TL 116,841 thousands (31 December 2015: TL 96,799 thousands) and TL 96,147 thousands (31 December 2015: TL 65,058 thousands) are kept at the central banks of Malta and Turkish Republic of Northern Cyprus, respectively as reserve deposits and TL 7,226,709 thousands (31 December 2015: TL 7,182,809 thousands) as collateral against funds borrowed at various banks.
The blocked account at the Central Bank of Turkey with a principal of TL 13,027,376 thousands (31 December 2015: TL 20,101,723 thousands) is for the reserve deposits in foreign currency and gold against the Banks' liabilities in Turkish Lira, foreign currencies and gold. The Bank also keeps a collateral of EUR 75,000,000 at the Central Bank of Turkey for borrowing activities in TL money market.
5.6.7 Additional information
5.6.7.1 Restrictions on the Bank's potential borrowings
None.
5.6.7.2 Cash inflows presenting increase in operating capacity of the Bank
None.
5.7 Related Party Risks
5.7.1 Transactions with the Bank's risk group; lendings and deposits and other related party transactions outstanding at period end and income and expenses from such transactions incurred during the period
5.7.1.1 Loans and other receivables
Current Period
Bank's Risk Group | Associates, Affiliates and Joint-Ventures | Bank's Direct and Indirect Shareholders | Other Components in Risk Group | |||
Loans and Other Receivables | Cash | Non-cash | Cash | Non-cash | Cash | Non-cash |
Balance at beginning of period | 3,837,790 | 2,197,037 | 52,056 | 827,462 | 2,047,670 | 467,468 |
Balance at end of period | 3,774,509 | 2,081,628 | 1,660,775 | 383,890 | 2,126,252 | 723,935 |
Interest and Commission Income | 57,087 | 597 | 484 | 8 | 110,798 | 404 |
Prior Period
Bank's Risk Group | Associates, Affiliates and Joint-Ventures | Bank's Direct and Indirect Shareholders | Other Components in Risk Group | |||
Loans and Other Receivables | Cash | Non-cash | Cash | Non-cash | Cash | Non-cash |
Balance at beginning of period | 3,318,634 | 1,522,279 | 399,748 | 316,606 | 1,537,174 | 702,845 |
Balance at end of period | 3,837,790 | 2,197,037 | 52,056 | 827,462 | 2,047,670 | 467,468 |
Interest and Commission Income | 78,697 | 376 | 655 | 8 | 101,329 | 282 |
5.7.1.2 Deposits
Bank's Risk Group | Associates, Affiliates and Joint-Ventures | Bank's Direct and Indirect Shareholders | Other Components in Risk Group | |||
Deposits | Current Period | Prior Period | Current Period | Prior Period | Current Period | Prior Period |
Balance at beginning of period | 687,407 | 681,112 | 336,153 | 535,204 | 543,360 | 349,385 |
Balance at end of period | 900,256 | 687,407 | 536,399 | 336,153 | 533,816 | 543,360 |
Interest Expense | 79,288 | 60,297 | 774 | 12,995 | 5,517 | 10,193 |
5.7.1.3 Derivative transactions
Bank's Risk Group | Associates, Affiliates and Joint-Ventures | Bank's Direct and Indirect Shareholders | Other Components in Risk Group | |||
| Current Period | Prior Period | Current Period | Prior Period | Current Period | Prior Period |
Transactions at Fair Value Through Profit or (Loss): | | | | | | |
Balance at beginning of period | 421,708 | 848,391 | 16,146,894 | 10,292,901 | - | 5,770 |
Balance at end of period | 557,282 | 421,708 | 13,251,152 | 16,146,894 | 843,120 | - |
Total Profit/(Loss) | (22,827) | (327,241) | (398,761) | (50,088) | (4,582) | - |
Transactions for Hedging: | | | | | | |
Balance at beginning of period | - | - | - | - | - | - |
Balance at end of period | - | - | - | - | - | - |
Total Profit/(Loss) | - | - | - | - | - | - |
5.7.2 The Bank's risk group
5.7.2.1 Relations with companies in risk group of/or controlled by the Bank regardless of nature of current transactions
Transactions with the risk group, are held under arm's-length conditions; terms are set according to the market conditions and in compliance with the Banking Law. The Bank's policy is to keep the balances and transaction volumes with the risk group at reasonable levels preventing any high concentration risk on balance sheet.
5.7.2.2 Concentration of transaction volumes and balances with risk group and pricing policy
The cash loans of the risk group amounting TL 2,964,089 thousands (31 December 2015: TL 3,132,513 thousands) compose 1.59% (31 December 2015: 1.97%) of the Bank's total cash loans and 1.04% (31 December 2015: 1.23%) of the Bank's total assets. The total loans and similar receivables amounting TL 7,561,536 thousands (31 December 2015: TL 5,937,516 thousands) compose 2.66% (31 December 2015: 2.33%) of the Bank's total assets. The non-cash loans of the risk group amounting TL 3,189,453 thousands (31 December 2015: TL 3,491,967 thousands) compose 5.82% (31 December 2015: 7.26%) of the Bank's total non-cash loans.
The deposits of the risk group amounting TL 1,970,471 thousands (31 December 2015: TL 1,566,920 thousands) compose 1.22% (31 December 2015: 1.11%) of the Bank's total deposits. The funds borrowed by the Bank from its risk group amounting TL 11,952,196 thousands (31 December 2015: TL 10,142,189 thousands) compose 29.67% (31 December 2015: 30.33%) of the Bank's total funds borrowed. The pricing in transactions with the risk group companies is set on an arms-length basis.
The credit card (POS) payables to the related parties, amounted to TL 216,508 thousands (31 December 2015: TL 137,353 thousands).
A total rent income of TL 11,585 thousands (31 December 2015: TL 8,859 thousands) was recognized for the real estates rented to the related parties.
Operating expenses for TL 19,585 thousands (31 December 2015: TL 11,494 thousands) were incurred for the IT services rendered by the related parties. Banking services fees of TL 1,820 thousands (31 December 2015: TL 1,098 thousands) were recognized from the related parties.
Insurance brokerage fee of TL 122,070 thousands (31 December 2015: TL 112,082 thousands), shares brokerage fee of TL 24,121 thousands (31 December 2015: TL 67,498 thousands), leasing customer acquisition fee of TL - (31 December 2015: TL 4,872 thousands), factoring customer acquisition fee of TL - (31 December 2015: TL 2,828 thousands), fleet business customer acquisition fee of TL - (31 December 2015: TL 357 thousands), fixed-rate securities brokerage fee of TL 7,297 thousands (31 December 2015: -) and fund brokerage fee of TL 109 thousands (31 December 2015: TL 142 thousands) were recognized as income from the services rendered for the affiliates.
Sale income of TL 18,189 thousands from sale of securities to Garanti Leasing and TL 5,720 thousands from sale of asset to Garanti Bank International are realized in the current period.
Operating expenses of TL 4,892 thousands (31 December 2015: TL 8,952 thousands) for advertisement and broadcasting services, of TL 40,427 thousands (31 December 2015: TL 36,210 thousands) for operational leasing services, and of TL 10,599 thousands (31 December 2015: TL 15,246 thousands) for travelling services rendered by the related parties were recognized as expense.
As of 31 December 2016, the net payment provided or to be provided to the key management of the Bank amounts to TL 101,032 thousands (31 December 2015: TL 120,553 thousands).
5.7.2.3 Other matters not required to be disclosed
None.
5.7.2.4 Transactions accounted for under equity method
Please refer to Note 5.1.8 investments in affiliates.
5.7.2.5 All kind of agreements signed like asset purchases/sales, service rendering, agencies, leasing, research and development, licences, funding, guarantees, management services
The Bank has agency contracts with Garanti Yatırım Menkul Kıymetler AŞ and Garanti Emeklilik ve Hayat AŞ. Accordingly, all the branches of the Bank serve as agencies to sell the products of these entities to customers. Agency services for trading of securities on behalf of customers are rendered by the Bank's specialised branches (Investment Centers).
Purchase of equipments for the Bank's internal use are partly arranged through financial leasing.
5.8 Domestic, Foreign and Off-Shore Branches or Equity Investments, and Foreign Representative Offices
5.8.1 Domestic and foreign branches and representative offices
| Number of Branches | Number Of Employees |
| ||
Domectic Branches | 959 | 19,552 | |
| |
| | | Country |
| |
Foreign Representative Offices | 1 | 1 | 1-Germany |
| |
| 1 | 1 | 2-England |
| |
| 1 | 1 | 3-China |
| |
| | | | Total Assets | Legal Capital |
Foreign Branches | 1 | 17 | 1- Luxembourg | 17,709,986 | 1,480,800 |
| 1 | 12 | 2- Malta | 28,536,237 | - |
| 7 | 105 | 3- NCTR | 1,547,883 | 15,520 |
5.8.2 Opening or closing of domestic and foreign branches and representative offices and significant changes in organisational structure
In 2016, 6 domestic branches were opened and 18 branches were closed.
5.9 Matters Arising Subsequent to Balance Sheet Date
None.
6 Other Disclosures on Activities of the Bank
6.1 Bank's latest international risk ratings
Outlook | Stable |
Long Term FC Deposit | Ba2 |
Long Term TL Deposit | Ba1 |
Short Term FC Deposit | Not prime |
Short Term TL Deposit | Not prime |
Basic Loan Assesment | ba2 |
Adjusted Loan Assesment | ba1 |
Long Term National Scale Rating (NSR) | Aa1.tr |
Short Term NSR | TR-1 |
Long Term FC Obligations | BB |
Long Term TL Deposit | BB |
Outlook | Stable |
Credit Profile (independent from the bank's shareholders and the rating of its resident country) | bb+ |
Outlook | Negative |
Long Term FC Outlook | BBB |
Short Term FC Outlook | F2 |
Long Term TL Outlook | BBB |
Short Term TL Outlook | F2 |
Financial Capacity | bbb- |
Support | 2 |
NSR | AAA(tur) |
JCR EURASIA RATINGS (6 April 2016)
International FC Outlook | Stable |
Long Term International FC | BBB |
Short Term International FC | A-3 |
International TL Outlook | Stable |
Long Term International TL | BBB+ |
Short Term International TL | A-2 |
National Outlook | Stable |
Long Term NSR | AAA(Trk) |
Short Term NSR | A-1+(Trk) |
Independency from Shareholders | A |
Support | 1 |
6.2 Dividends
As per the decision made at the annual general assembly of shareholders of the Bank on 31 March 2016, the distribution of the net profit of the year 2015, was as follows:
2015 PROFIT DISTRIBUTION TABLE | |
2015 Net Profit | 3,406,507 |
A - I. Legal reserve (Turkish Commercial Code 519/1) at 5% | - |
Undistributable funds | (4,723) |
B - First dividend at 5% of the paid-in capital | (210,000) |
C - Extraordinary reserves at 5% after above deductions | (159,826) |
D - Second dividend to the shareholders | (357,000) |
E - Extraordinary reserves | (2,639,258) |
F - II. Legal reserve (Turkish Commercial Code 519/2) | (35,700) |
6.3 Other disclosures
None.
7 Disclosures on Independent Auditors' Report
7.1 Disclosure on independent auditors' report
The unconsolidated financial statements of the Bank as of 31 December 2016, have been audited by DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik AŞ (a member of Deloitte Touche Tohmatsu Limited) and the independent auditors' report dated 30 January 2017, is presented before the accompanying financial statements.
7.2 Disclosures and footnotes prepared by independent accountants
None.
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