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TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Unconsolidated Financial Statements for the Year Ended
31 December 2012
İŞBANK
ANNUAL REPORT 2012
Financial Assets Held For Trading are presented in the balance sheet with their fair values and are subject to valuation at fair values after
the initial recognition. In cases where values that form the basis for the fair value do not exist in active market conditions, it is accepted that
the fair value is not reliably determined and “amortized cost”, calculated by the internal rate of return method, is taken into account as the
fair value.
Any gains or losses resulting from such valuation are recorded in the profit and loss accounts. As per the explanations of the Uniform Code of
Accounts (UCA), any positive difference between the historical cost and amortized cost of financial assets are recognized under the “Interest
Income” account, and in case the fair value of the asset is over the amortized cost, the positive difference is recognized in the “Gains on
Securities Trading” account. If the fair value is less than the amortized cost, the negative difference is recognized under the “Losses on
Securities Trading” account. Any profit or loss resulting from the disposal of those assets before their maturity date is recognized within the
framework of the same principles.
a.2. Financial Assets at Fair Value through Profit and Loss
Financial assets at fair value through profit and loss represent the financial assets at fair value through profit and loss at the initial
recognition and those are not obtained for trading purposes. Recognition of fair value differences of those assets are similar to the financial
asset held for trading.
b. Information on Financial Assets Available for Sale and Held to Maturity Investments
b.1.
Information on Financial Assets Available for Sale
Financial assets available for sale represent non-derivative financial assets other than bank loans and receivables, held to maturity
investments and financial assets at fair value through profit and loss. Initial recognition and subsequent valuation of financial assets
available for sale are performed based on the fair value including transaction costs. The amount arising from the difference between cost
and amortized value is recognized through income statement by using the internal rate of return. If a price does not occur in an active
market, fair value cannot be reliably determined and “Amortized Value” is determined as the fair value using the internal rate of return.
Unrealized gains and losses arising from changes in fair value of the financial assets available for sale are not recognized in the income
statement, they are recognized in the “Marketable Securities Revaluation Fund” until the disposal, sale, redemption or incurring loss of those
assets. Fair value differences accounted under equity arising from the application of fair value are reflected to the income statement when
these assets are sold or when the valuation difference is collected.
b.2. Information on Held to Maturity Investments
Held to maturity investments are the investments, for which there is an intention of holding until maturity and the relevant conditions for
fulfillment of such intention, including the funding ability, and for which there are fixed or determinable payments with fixed maturity;
and which are recognized at fair value at initial recognition. Held to maturity investments with the initial recognition at fair value including
transaction costs are subject to valuation with their discounted cost value by using the internal rate of return method less provision for any
impairment, if any. Interest income from held to maturity investments are recognized in the income statement as an interest income.
There are no financial assets that are classified by the Bank as held to maturity investments, however, they cannot be classified under this
classification for two years for not satisfying the requirements of the related classification.
3. Loans and Receivables
Loans and receivables represent unquoted financial assets in an active market that provide money, goods or services to the debtor with
fixed or determinable payments.
Loans and receivables are initially recognized with their fair values including settlement costs and carried at their amortized costs calculated
using the internal rate of return at the subsequent recognition.
Retail and corporate loans that are followed under cash loans are accounted at original maturities, based on their contents, under the
accounts defined by the Uniform Code of Accounts (UCA) and the Explanatory Manual.
Foreign currency indexed consumer and corporate loans are followed at TRY accounts after converting into TRY by using the opening
exchange rates. At the subsequent periods, increases and decreases in the loan capital are recognized under the foreign currency income
and expense accounts in the income statement depending on foreign currency rates being higher or lower than opening date rates.
Repayments are calculated using the exchange rates at the repayment dates and exchange differences are recognized under the foreign
currency income and expense accounts in the income statement.
VIII. Impairment of Financial Assets
At each balance sheet date, the Bank reviews the carrying amounts of its financial asset or group of financial assets whether there is
an objective indication that those assets have suffered an impairment loss. If such indication exists, the Bank determines the related
impairment amount.
A financial asset or a group of financial assets is subject to impairment loss only if there is an objective indication that the occurrence
of one or more than one event (“loss event”) subsequent to the initial recognition of that asset has an effect on the reliable estimate of
the expected future cash flows of the related financial asset and asset group. Irrespective of their high probability of incurrence, future
expected losses are not recognized.
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