TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Consolidated Financial Statements for the Year Ended
31 December 2012
ANNUAL REPORT 2012
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 commercial loans that are followed under cash loans are accounted at original maturities, based on their contents.
Foreign currency indexed consumer and corporate loans are followed at TL accounts after converting into TL 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 Group companies evaluate the carrying amount of its financial assets or a group of its financial assets to
determine whether there is an objective indication that those assets have suffered an impairment loss. If such indication exists, the Group
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.
Impairment losses attributable to the held to maturity investments are measured as the difference between the present values of
estimated future cash flows discounted using the original interest rate of financial asset and the book value of asset. The related difference
is recognized as a loss and it decreases the book value of the financial asset. At subsequent periods, if the impairment loss amount
decreases, impairment loss recognized is reversed.
When a decline occurs in the fair values of the “financial assets available for sale” of which value decreases and increases are recognized
in equity, the accumulated profit/loss that had been recognized directly in equity is transferred from equity to period profit or loss. If, in a
subsequent period, the fair value of the related asset increases, the impairment loss is reversed, with the amount of the reversal recognized
in profit or loss.
Loans are classified and followed in line with the provisions of the “Determining the Nature of Loans and Receivables and Principles and
Procedures on the Allocation of Loan and Receivable Provisions”, published on the Official Gazette numbered 26333 dated 1 November
2006. While the Parent Bank was allocating specific provision for the total amount of non-performing loans and other receivables,
considering an account the minimum reserve ratios to calculate the provision has been amended accordingly, since the third quarter of
the current year; the Parent Bank has started to allocate specific provisions in accordance with the minimum provision rates mentioned.
Between the activities of the Group for the financial leasing and factoring operations for the receivables in the “Financial Leasing, Factoring
and Financing Companies Communiqué on Principles and Procedures for the Provision for Receivables” under the special provision is made
and published on the Official Gazette numbered 26558 dated 20 July 2007. Specific provisions are reflected in the income statement.
Provisions released in the same year, “Provision Expense” account are credited in the past years, the remaining part of the provisions in the
“Other Operating Income” account transferred to and recognized.
Other than specific allowances, the Parent Bank and the financial institutions affiliated to the Group also provide “general allowances” for
loan and other receivables classified in accordance with the Regulation on Identification of and Provision against Non-Performing Loans and
IX. Offsetting Financial Instruments
A financial asset and a financial liability shall be offset and the net amount shall be presented in the balance sheet only when a party
currently has a legally enforceable right to set off the recognized amounts or intends either to settle on a net basis or to realize the asset
and settle the liability simultaneously.
X. Sale and Repurchase Agreements and Securities Lending Transactions
Marketable securities subject to repurchase agreements are classified under “Available for Sale Financial Assets” or “Held to Maturity
Investments” in the Parent Bank’s portfolio and they are valued according to the valuation principles of the related portfolios.
Funds obtained from the repurchase agreements are recognized under “Funds from Repurchase Transactions” account in liabilities. For the
difference between the sale and repurchase prices determined by the repo agreements for the period; expense accrual is calculated using
the internal rate of return method.