TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Consolidated Financial Statements for the Year Ended
31 December 2012
ANNUAL REPORT 2012
Qualified share is the share that directly or indirectly constitutes ten or more than ten percent of an entity’s capital or voting rights and
irrespective of this requirement, possession of privileged shares giving right to appoint members of board of directors.
Equity accounting method is an evaluation method of associates by which the Parent Bank’s share in the associates’ equity is compared
with the book value of the associate accounted in the Parent Bank’s balance sheet. The difference is recognized in profit or loss in the
consolidated income statement.
Accounting policies of Arap-Türk Bankası A.Ş., the only associate that is included in the consolidated financial statements by using the
equity accounting method are not different than the Parent Bank’s. Thus, no adjustments of compliance have been applied.
Special purpose entities established for the Bank’s securitization loan transactions are included in the financial statements in accordance
with the Interpretation No 12 of Turkish Accounting Standards “Consolidation – Special Purpose Entities”.
Basis of consolidation of joint ventures:
The Parent Bank does not have any joint ventures to be consolidated.
Principles applied during share transfer, merger and acquisition: None.
2. Presentation of unconsolidated subsidiaries, associates and equity securities included in the available-for-sale portfolio in
consolidated financial statements:
Equity securities recognized as subsidiaries, associates and financial assets available for sale are accounted in accordance with TAS
39 “Turkish Accounting Standard for Financial Instruments: Recognition and Measurement” in the consolidated financial statements.
Subsidiaries, whose shares are traded in an active market (stock market), are shown in the financial statements with their fair values by
taking into account their prices recorded in the related market (stock market). Subsidiaries and associates whose shares are not traded in an
active market (stock market), are followed at their cost of acquisition and these assets are shown in the financial statements with their cost
values after the deduction of, impairment losses, if any.
IV. Forward, Options and Other Derivative Transactions
Derivative transactions of the Group consist of foreign currency and interest rate swaps, forwards, foreign currency options and interest rate
options. The Group has no derivative instruments decomposed from the main contract.
Derivative transactions are carried at their fair values at the contract dates and the receivables and payables arising in these transactions
are followed under off-balance sheet accounts. Derivative transactions are valued at their fair values in the reporting periods following
their recording and the valuation differences are shown under the accounts, “Derivative Financial Assets Held for Trading” and “Derivative
Financial Liabilities Held for Trading”, depending on the difference being positive or negative. Although some derivative transactions are
qualified as economical hedging items, they do not meet all the definition requirements of hedge accounting items. Therefore, under the
Turkish Accounting Standard No: 39 “Financial Instruments: Recognition and Measurement” (TAS 39), these derivative instruments are
recognized as held for trading. The valuation differences arising from the valuation of derivative transactions are associated with the income
On off-balance sheet items table, options which generated assets for the Parent Bank are presented under “call options” line and which
generated liabilities are presented under “put options” line.
V. Interest Income and Expenses
Interest income and expenses are recognized on an accrual basis using the effective interest method (the rate that equals the future
cash flows of a financial asset or liability to its present net book value) in conformity with TAS 39 “Financial Instruments: Recognition and
In accordance with the related legislation, realized and unrealized interest accruals of the non-performing loans are reversed and interest
income related to these loans are recorded as an interest income only when they are collected.
VI. Fee and Commission Income and Expenses
Fees and commission income and expenses are recorded either on accrual basis or by using the effective interest method. Income earned
in return for services rendered contractually or due to operations like sale or purchase of assets on behalf of a third party real person or
corporate body are recognized in income accounts in the period of collection.
VII. Financial Assets
Financial assets are comprised of cash, contractual rights to obtain cash or another financial asset from or to exchange financial instruments
with the counterparty, or the capital instrument transactions of the counterparty. According to the Parent Bank management’s purpose
of holding, the financial assets are classified into four groups as “Financial Assets at Fair Value through Profit And Loss”, “Financial Assets
Available for Sale”, “Held to Maturity Investments” and “Loans and Receivables”.