RNS Number:9834H
Turk Ekonomi Bankasi A.S.
26 February 2003
PART 1
Turk Ekonomi Bankasy
Anonim Sirketi
Unconsolidated Financial Statements
As of December 31, 2002
Together With Auditors' Report
(CONVENIENCE TRANSLATION OF A REPORT AND FINANCIAL STATEMENTS
ORIGINALLY ISSUED IN TURKISH- SEE SECTION II, NOTE 3)
(Convenience Translation of A Report And Financial Statements
Originally Issued In Turkish - See Section II, Note 3)
TURK EKONOMY BANKASI ANONYM SYRKETY
AS OF DECEMBER 31, 2002
TOGETHER WITH AUDITORS' REPORT
We have audited the balance sheet of Turk Ekonomi Bankasy Anonim Sirketi as of
December 31, 2002 and the related statements of income, changes in shareholders'
equity and cash flows for the year then ended. These financial statements are
expressed in the equivalent purchasing power of Turkish lira as of December 31,
2002. These financial statements are the responsibility of the Bank's
management. Our responsibility as independent auditors is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with the auditing standards which were
determined under the provisions of Banking Law Number 4389. These standards
require that the audit should be planned and performed to obtain reasonable
assurance as to whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the accompanying financial statements are presented fairly, in
all material respects, the financial position of Turk Ekonomi Bankasy Anonim
Sirketi at December 31, 2002 and the results of its operations and cash flows
for the year then ended in accordance with the accounting principles and
standards that are based on the Article 13 of the Banking Law number 4389.
Additional paragraph for convenience translation to English:
The above mentioned accounting principles differ from International Financial
Reporting Standards (IFRS) issued by International Accounting Standards Board
and so far as such differences apply to the financial statements of the Bank
they mainly relate to the format of financial statements and disclosure
requirements, accounting for deferred taxes and accounting for retirement pay
liabilities. The effects of the differences between these accounting principles
and accounting principles generally accepted in the countries in which the
accompanying financial statements are to be used and IFRS have not been
quantified in the accompanying financial statements. Accordingly, the
accompanying financial statements are not intended to present the financial
position and results of operations and cash flows in accordance with the
accounting principles generally accepted in the countries of users of the
financial statements and IFRS. The Bank's consolidated financial statements
prepared in accordance with the accounting principles and standards that are
based on the Article 13 of the Banking Law number 4389 will be issued
separately.
Guney Serbest Muhasebeci Mali Mupavirlik Anonim Sirketi
An Affiliated Firm of Ernst & Young International
Esra Peri, SMMM
February 21, 2003
Istanbul, Turkey
Current Period Prior Period
31.12.2002 31.12.2001
ASSETS Note TL FC Total TL FC Total
Ref.
I. CASH AND BALANCES WITH THE CENTRAL 20,859 408,621 429,480 8,649 159,324 167,973
BANK OF TURKEY
1.1 Cash - 6,059 - 6,059 6,129 - 6,129
1.2 Foreign currency - - 80,624 80,624 - 157,522 157,522
1.3 Balances with the Central Bank of IV-1 14,800 327,997 342,797 2,520 1,802 4,322
Turkey
II. TRADING SECURITIES (Net) 24,994 2,940 27,934 4,188 8,045 12,233
2.1 Public sector debt securities IV-2 24,994 2,668 27,662 4,188 8,045 12,233
2.1.1 Government bonds IV-2 19,252 - 19,252 4,188 8,045 12,233
2.1.2 Treasury bills IV-2 5,741 - 5,741 - - -
2.1.3 Other IV-2 1 2,668 2,669 - - -
2.2 Share certificates - - - - - - -
2.3 Other marketable securities - - 272 272 - - -
III. BANKS AND OTHER FINANCIAL 23,010 304,218 327,228 9 250,999 251,008
INSTITUTIONS
3.1 Due from banks - 23,010 304,218 327,228 9 250,989 250,998
3.1.1 Domestic banks - 23,010 105,782 128,792 9 51,118 51,127
3.1.2 Foreign banks IV-3 - 198,436 198,436 - 199,871 199,871
3.2 Other financial institutions - - - - - 10 10
IV. MONEY MARKET PLACEMENTS 227,250 178,732 405,982 137,251 535,657 672,908
4.1 Interbank money market placements - 227,250 178,732 405,982 137,251 535,657 672,908
4.2 Istanbul Stock Exchange money market - - - - - - -
placements
4.3 Receivables from reverse repurchase - - - - - - -
agreements
V. SECURITIES AVAILABLE FOR SALE (Net) 9 16,856 16,865 - - -
5.1 Share certificates IV-5 9 - 9 - - -
5.2 Other marketable securities IV-5 - 16,856 16,856 - - -
VI. LOANS 356,053 445,819 801,872 269,052 324,597 593,649
6.1 Short term IV-6 330,230 429,381 759,611 232,389 309,888 542,277
6.2 Medium and long term IV-6 20,861 16,438 37,299 20,936 14,709 35,645
6.3 Loans under follow-up IV-6 20,212 - 20,212 22,641 - 22,641
6.4 Specific provisions (-) IV-6 (15,250) - (15,250) (6,914) - (6,914)
VII. FACTORING RECEIVABLES IV-7 - - - - - -
VIII. SECURITIES HELD TO MATURITY (Net) 36,557 - 36,557 48,106 38,573 86,679
8.1 Public sector debt securities IV-8 36,557 - 36,557 48,099 38,573 86,672
8.1.1 Government bonds IV-8 36,557 - 36,557 48,099 - 48,099
8.1.2 Treasury bills IV-8 - - - - - -
8.1.3 Other IV-8 - - - - 38,573 38,573
8.2 Other marketable securities IV-8 - - - 7 - 7
IX. INVESTMENTS AND ASSOCIATES (Net) 5,643 - 5,643 4,620 - 4,620
9.1 Financial investments and associates IV-9 5,643 - 5,643 4,620 - 4,620
9.2 Non-Financial investments and - - - - - - -
associates
X. SUBSIDIARIES (Net) 57,425 43,747 101,172 54,129 35,966 90,095
10.1 Financial subsidiaries IV-10 57,425 43,747 101,172 54,129 35,966 90,095
10.2 Non-Financial subsidiaries - - - - - - -
XI. OTHER INVESTMENTS (Net) IV-11 - - - - - -
XII. FINANCE LEASE RECEIVABLES (Net) - - - - - -
12.1 Gross finance lease receivables IV-12 - - - - - -
12.2 Unearned income ( - ) IV-12 - - - - - -
XIII. RESERVE DEPOSITS - 9,242 122,663 131,905 8,985 122,679 131,664
XIV. MISCELLANEOUS RECEIVABLES IV-13 261 38 299 309 44 353
XV. ACCRUED INTEREST AND INCOME 24,060 3,370 27,430 25,015 7,541 32,556
RECEIVABLES
15.1 Loans IV-14 9,332 2,623 11,955 9,970 4,810 14,780
15.2 Marketable securities IV-14 4,006 373 4,379 5,049 1,671 6,720
15.3 Other IV-14 10,722 374 11,096 9,996 1,060 11,056
XVI. PROPERTY AND EQUIPMENT (Net) 37,234 - 37,234 33,500 - 33,500
16.1 Book value IV-15 83,747 - 83,747 72,723 - 72,723
16.2 Accumulated depreciation ( - ) IV-15 (46,513) - (46,513) (39,223) - (39,223)
XVII. INTANGIBLE ASSETS (Net) 2,964 - 2,964 2,324 - 2,324
17.1 Goodwill IV-16 - - - - - -
17.2 Other IV-16 6,591 - 6,591 4,998 - 4,998
17.3 Accumulated amortization ( - ) (3,627) - (3,627) (2,674) - (2,674)
OTHER ASSETS IV-17 18,831 1,786 20,617 13,726 5,833 19,559
XVIII.
TOTAL ASSETS 844,392 1,528,790 2,373,182 609,863 1,489,258 2,099,121
The accompanying notes are an integral part of these balance sheets.
Current Period Prior Period
31.12.2002 31.12.2001
LIABILITIES Note TL FC Total TL FC Total
Ref.
I. DEPOSITS 356,823 1,334,664 1,691,487 263,556 1,128,070 1,391,626
1.1 Bank deposits V-1 18,309 41,635 59,944 9,237 14,363 23,600
1.2 Saving deposits V-1 163,563 - 163,563 130,909 - 130,909
1.3 Public sector deposits V-1 35 - 35 122 - 122
1.4 Commercial deposits V-1 141,706 - 141,706 122,239 - 122,239
1.5 Other institutions deposits V-1 33,210 - 33,210 1,049 - 1,049
1.6 Foreign currency deposits V-1 - 1,270,574 1,270,574 - 1,099,441 1,099,441
1.7 Precious metals deposit accounts V-1 - 22,455 22,455 - 14,266 14,266
II. MONEY MARKET BALANCES 22,800 - 22,800 - - -
2.1 Interbank money market takings - - - - - - -
2.2 Istanbul Stock Exchange money market - - - - - - -
takings
2.3 Funds provided under repurchase V-2 22,800 - 22,800 - - -
agreements
III. FUNDS BORROWED 15,945 247,092 263,037 25,652 318,361 344,013
3.1 Funds borrowed from the Central Bank - - - - - - -
of Turkey
3.2 Other funds borrowed V-3 15,945 247,092 263,037 25,652 318,361 344,013
3.2.1 Domestic banks and institutions V-3 15,945 12,144 28,089 16,166 15,546 31,712
3.2.2 Foreign banks, institutions and V-3 - 234,948 234,948 9,486 302,815 312,301
funds
IV. MARKETABLE SECURITIES ISSUED (Net) - - - - - -
4.1 Bills V-4 - - - - - -
4.2 Asset backed securities V-4 - - - - - -
4.3 Bonds V-4 - - - - - -
V. FUNDS V-5 - - - - - -
VI. MISCELLANEOUS PAYABLES V-6 10,852 24,635 35,487 10,173 32,703 42,876
VII. OTHER EXTERNAL RESOURCES - 18,646 6,605 25,251 21,566 13,248 34,814
VIII. TAXES AND OTHER DUTIES PAYABLE V-8 5,947 - 5,947 6,580 - 6,580
IX. FACTORING PAYABLES V-9 - - - - - -
X. FINANCE LEASE PAYABLES (Net) - 6,746 6,746 - 3,624 3,624
10.1 Finance Lease Payables V-10 - 8,175 8,175 - 3,624 3,624
10.2 Deferred finance lease expenses ( -) V-10 - (1,429) (1,429) - - -
XI. ACCRUED INTEREST AND EXPENSES 12,455 2,437 14,892 11,106 5,039 16,145
PAYABLE
11.1 Deposits V-11 5,243 1,012 6,255 6,160 1,518 7,678
11.2 Borrowings V-11 1,622 1,425 3,047 1,629 3,521 5,150
11.3 Repurchase agreements V-11 28 - 28 - - -
11.4 Other V-11 5,562 - 5,562 3,317 - 3,317
XII. PROVISIONS 27,154 - 27,154 22,373 - 22,373
12.1 General provisions V-12 6,093 - 6,093 4,828 - 4,828
12.2 Reserve for employee termination V-12 926 - 926 737 - 737
benefits
12.3 Provisions for income taxes V-12 19,592 - 19,592 16,729 - 16,729
12.4 Insurance technical reserves (Net) - - - - - - -
12.5 Other provisions V-12 543 - 543 79 - 79
XIII. SUBORDINATED LOANS V-12 - 24,596 24,596 - - -
XIV. MINORITY INTEREST - - - - - -
XV. SHAREHOLDERS' EQUITY 255,785 - 255,785 237,070 - 237,070
15.1 Paid-in capital V-13 55,125 - 55,125 55,125 - 55,125
15.2 Supplementary capital V-13 182,146 - 182,146 405,554 - 405,554
15.2.1 Share premium V-13 - - - - - -
15.2.2 Share cancellation profits - - - - - - -
15.2.3 Marketable securities value V-15 201 - 201 - - -
increase fund
15.2.4 Revaluation fund V-16 - - - - - -
15.2.5 Value increase in revaluation V-17 - - - - - -
fund
15.2.6 Other capital reserves - - - - - - -
15.2.7. Effect on inflation accounting on - 181,945 - 181,945 405,554 - 405,554
share capital
15.3 Profit reserves - - - - 50,502 - 50,502
15.3.1 Legal reserves V-18 - - - 50,502 - 50,502
15.3.2 Status reserves - - - - - - -
15.3.3 Extraordinary reserves V-19 - - - - - -
15.3.4 Other profit reserves - - - - - - -
15.4 Profit or loss - 18,514 - 18,514 (274,111) (274,111)
15.4.1 Prior year income/loss - - - - (256,731) - (256,731)
Group's share - - - - (256,731) - (256,731)
15.4.1.1
Minority shares V-20 - - - - - -
15.4.1.2
15.4.2 Current year income/loss - 18,514 - 18,514 (17,380) - (17,380)
Group's share - 18,514 - 18,514 (17,380) - (17,380)
15.4.2.1
Minority shares - - - - - - -
15.4.2.2
TOTAL LIABILITIES 726,407 1,646,775 2,373,182 598,076 1,501,045 2,099,121
The accompanying notes are an integral part of these balance sheets.
Current Prior Period
Period
31.12.2001
31.12.2002
INCOME AND EXPENSES Note Ref. Total Total
I. INTEREST INCOME VI 325,800 471,631
1.1 Interest on loans 159,792 195,299
1.1.1 Interest on TL loans 132,438 151,855
1.1.1.1 Short term loans 124,734 128,928
1.1.1.2 Medium and long term loans 7,704 22,927
1.1.2 Interest on foreign currency loans 26,713 43,339
1.1.2.1 Short term loans 25,770 39,066
1.1.2.2 Medium and long term loans 943 4,273
1.1.3 Interest on loans under follow-up 641 105
1.1.4 Premiums received from Resource Utilisation Support Fund - -
1.2 Interest received from reserve deposits 4,244 1,376
1.3 Interest received from banks 17,427 73,260
1.3.1 The Central Bank of Turkey 18 2,237
1.3.2 Domestic banks 11,537 42,726
1.3.3 Foreign banks 5,872 28,297
1.4 Interest received from money market transactions 85,849 126,351
1.5 Interest received from marketable securities portfolio 58,010 73,512
1.5.1 Trading securities 24,957 73,512
1.5.2 Available-for-sale securities 770 -
1.5.3 Held to maturity securities 32,283 -
1.6 Other interest income 478 1,833
II. INTEREST EXPENSE VI 170,909 367,504
2.1 Interest on deposits 110,886 263,356
2.1.1 Bank deposits 8,471 20,127
2.1.2 Saving deposits 72,970 83,095
2.1.3 Public sector deposits 4 -
2.1.4 Commercial deposits 9,737 71,881
2.1.5 Other institutions deposits 155 786
2.1.6 Foreign currency deposits 19,403 87,084
2.1.7 Precious metals vault accounts 146 383
2.2 Interest on money market transactions 33 585
2.3 Interest on funds borrowed 29,894 101,839
2.3.1 The Central Bank of Turkey - -
2.3.2 Domestic banks 7,508 7,262
2.3.3 Foreign banks 21,871 69,283
2.3.4 Other financial institutions 515 25,294
2.4 Interest on securities issued - -
2.5 Other interest expense 30,096 1,724
III. NET INTEREST INCOME (I - II) - 154,891 104,127
IV. NET FEES AND COMMISSIONS INCOME - 16,625 14,547
4.1 Fees and commissions received 29,039 29,684
4.1.1 Cash loans 2,604 4,633
4.1.2 Non-cash loans 7,242 8,082
4.1.3 Other 19,193 16,969
4.2 Fees and commissions paid 12,414 15,137
4.2.1 Cash loans 1,770 4,405
4.2.2 Non-cash loans 28 75
4.2.3 Other 10,616 10,657
V. DIVIDEND INCOME - - -
5.1 Trading securities - -
5.2 Available-for-sale securities - -
VI. NET TRADING INCOME - 19,904 53,186
6.1 Profit/losses on trading account securities (Net) 18,775 18,443
6.2 Foreign exchange gains/losses (Net) 1,129 34,743
VII PROFIT/LOSS FROM HELD TO MATURITY MARKETABLE SECURITIES - - -
VIII. OTHER OPERATING INCOME - 11,964 14,012
IX. TOTAL OPERATING INCOME (III+IV+V+VI+VII+VIII) - 203,384 185,872
X. PROVISION FOR LOAN LOSSES OR OTHER RECEIVABLES (-) - 15,773 11,921
XI. OTHER OPERATING EXPENSES (-) - 113,230 120,449
XII. NET OPERATING INCOME (IX-X-XI) - 74,381 53,502
XIII. PROFIT/LOSSES FROM ASSOCIATES AND SUBSIDIARIES - 6,864 30,220
XIV. NET POSITION INCOME/EXPENSE - (41,158) (92,669)
XV. INCOME BEFORE TAXES (XII+XIII) - 40,087 (8,947)
XVI. PROVISION FOR TAXES ON INCOME (-) - (21,573) (8,433)
XVII. NET OPERATING INCOME/EXPENSE AFTER TAXES (XIV-XV) - 18,514 (17,380)
XVIII. EXTRAORDINARY INCOME/EXPENSE AFTER TAXES - - -
18.1 Extraordinary net income/expense before taxes - -
18.1.1 Extraordinary income - -
18.1. 2 Extraordinary expense (-) - -
18.2 Provision for taxes on extraordinary income - -
XIX. PROFIT/LOSSES ON UNCONSOLIDATED INVESTMENTS (-) - - -
XX. NET PROFIT/LOSSES (XVI+XVII+XVIII-XIX) VI-9 18,514 (17,380)
20.1 Group's profit/loss 18,514 (17,380)
20.2 Minority shares - -
XXI. Earnings/Losses per share 167.92 -
The accompanying notes are an integral part of these statements.
Current Period Prior Period
31.12.2002 31.12.2001
OFF BALANCE SHEET COMMITMENTS Note TL FC TOTAL TL FC TOTAL
Ref.
A. OFF BALANCE SHEET COMMITMENTS 525,686 1,386,193 1,911,879 416,727 973,122 1,389,849
(I+II+III)
I. GUARANTEES VII-8 261,914 545,995 807,909 236,415 550,843 787,258
1.1. Letters of guarantee 261,842 254,117 515,959 236,415 314,262 550,677
1.1.1. Guatantees subject to State 28,507 253 28,760 16,761 44,106 60,867
Tender Law
1.1.2. Guarantees given for foreign 69,747 9,497 79,244 - 2,419 2,419
trade operations
1.1.3. Other letters of guarantee 163,588 244,367 407,955 219,654 267,737 487,391
1.2. Banks loans - 40,361 40,361 - 28,222 28,222
1.2.1. Import letter of acceptance - 40,361 40,361 - 27,211 27,211
1.2.2. Other bank acceptances - - - - 1,011 1,011
1.3. Letters of credit 72 243,888 243,960 - 193,663 193,663
1.3.1. Documentary letters of credit 72 205,672 205,744 - 193,663 193,663
1.3.2. Other letters of credit - 38,216 38,216 - - -
1.4. Prefinancing given as guarantee - - - - - -
1.5. Endorsements - - - - - -
1.5.1. Endorsements to the Central Bank - - - - - -
of Turkey
1.5.2. Other endorsements - - - - - -
1.6. Securities issue purchase - - - - - -
guatantees
1.7. Other guarantees - - - - 1,420 1,420
1.8. Other collaterals 7,629 7,629 - 13,276 13,276
II. COMMITMENTS - 181,237 329,233 510,470 167,458 151,422 318,880
2.1. Irrevocable commitments 181,237 329,233 510,470 167,458 - 167,458
2.1.1. Asset purchase commitments 1,000 - 1,000 - - -
2.1.2. Deposit purchase and sales - 329,233 329,233 - - -
commitments
2.1.3. Share capital commitment to - - - - - -
associates and subsidiaries
2.1.4. Loan granting commitments 112,902 - 112,902 103,487 - 103,487
2.1.5. Securities issue brokerage - - - - - -
commitments
2.1.6. Commitments for reserve deposit - - - - - -
requirements
2.1.7. Commitments for credit card 67,335 - 67,335 63,971 - 63,971
limits
2.1.8. Other irrevocable commitments - - - - - -
2.2. Revocable commitments - - - - 151,422 151,422
2.2.1. Revocable loan granting - - - - - -
commitments
2.2.2. Other revocable commitments - - - - 151,422 151,422
III. DERIVATIVE FINANCIAL INSTRUMENTS VII-2 82,535 510,965 593,500 12,854 270,857 283,711
3.1. Forward foreign currency buy/sell 82,535 212,741 295,276 12,854 267,077 279,931
transactions
3.1.1. Forward foreign currency 21,004 125,432 146,436 5,375 134,476 139,851
transactions-buy
3.1.2. Forward foreign currency 61,531 87,309 148,840 7,479 132,601 140,080
transactions-sell
3.2. Swap transactions related to f.c. - 298,224 298,224 - 3,780 3,780
and interest rates
3.2.1. Foreign currency swap-buy - 148,404 148,404 - 1,893 1,893
3.2.2. Foreign currency swap-sell - 149,820 149,820 - 1,887 1,887
3.2.3. Interest rate swaps-buy - - - - - -
3.2.4. Interest rate swaps-sell - - - - - -
3.3. Foreign currency and interest - - - - - -
rate options
3.3.1. Foreign currency options-buy - - - - - -
3.3.2. Foreign currency options-sell - - - - - -
3.3.3. Interest rate options-buy - - - - - -
3.3.4. Interest rate options-sell - - - - - -
3.4. Foreign currency futures - - - - - -
3.4.1. Foreign currency futures-buy - - - - - -
3.4.2. Foreign currency futures-sell - - - - - -
3.5. Interest rate futures - - - - - -
3.5.1. Interest rate futures-buy - - - - - -
3.5.2. Interest rate futures-sell - - - - - -
3.6. Other - - - - - -
B. CUSTODY AND PLEDGED ITEMS (IV+V) 1,155,626 384,239 1,539,865 985,573 200,101 1,185,674
-
IV. ITEMS HELD IN CUSTODY 808,614 256,943 1,065,557 698,194 174,112 872,306
-
4.1. Assets under management - - - - - -
4.2. Investment securities held in 281,669 144,849 426,518 349,432 70,678 420,110
custody
4.3. Checks received for collection 514,360 44,196 558,556 342,246 24,186 366,432
4.4. Commercial notes received for 12,585 20,967 33,552 6,516 29,907 36,423
collection
4.5. Other assets received for - 46,931 46,931 - 49,341 49,341
collection
4.6. Assets received for public - - - - - -
offering
4.7. Other items under custody - - - - - -
4.8. Custodians - - - - - -
V. PLEDGED ITEMS 347,012 127,296 474,308 287,379 25,989 313,368
-
5.1. Marketable securities 9,235 8,369 17,604 495 - 495
5.2. Guarantee notes 6,208 1,319 7,527 9,342 1,309 10,651
5.3. Commodity 188,595 - 188,595 158,543 - 158,543
5.4. Warranty - - - - - -
5.5. Immovables 111,746 37,049 148,795 118,999 24,679 143,678
5.6. Other pledged items 31,228 80,559 111,787 - 1 1
5.7. Pledged items-depository - - - - - -
TOTAL COMMITMENTS (A+B) VII-8 1,681,312 1,770,432 3,451,744 1,402,300 1,173,223 2,575,523
The accompanying notes are an integral part of these statements.
The accompanying notes are an integral part of these statements.
Effect on
inflation
Paid-in Accounting Share Legal Status Extraordinary Other
Note Capital o n premium Reserves Reserves Reserves Reserves
Ref. Capital
1 Balances at the V-13 55,125 405,554 - 48,013 - - -
beginning of the
period -31.12.2000
2 Foreign exchange - - - - - - -
difference
3 Net Income - - - - - - -
4 Dividend - - - - - -
5 Transferred to legal V-18 - - - 2,489 - - -
reserves
6 Bond Convertible to - - - - - -
shares
7 Issuance of share - - - - - - -
certificate
Closing Balance of the 55,125 405,554 - 50,502 - - -
period -31.12.2001
1 Balances at the 55,125 405,554 - 50,502 - - -
beginning of the
period -31.12.2001
Increases in the - - - - - - -
period :
2 Available for sale - - - - - - -
investment
2.1 Net fair value - - - - - - -
gain/losses
3 Cash flow hedge: - - - - - - -
3.1 Net fair value - - - - - - -
gain/losses
4 Foreign exchange - - - - - - -
difference
Transferred Amount :
5 Available for sale - - - - - - -
investment
5.1 Transferred to net - - - - - - -
income
6 Cash flow hedge: V-15 - - - - - - -
6.1 Transferred to net - - - - - - -
income
6.2 Transferred to assets V-15 - - - - - - -
7 Net Income - - - - - - -
8 Dividend - - - - - - -
9 Transferred to legal V-18 - (223,609) - (50,502) - - -
reserves
10 Issuance of share - - - - - - -
certificate
Closing Balance 55,125 181,945 - - - - -
(1+2+3+4+5+6+7+8+9+10)
Value Marketable
Increase Securities
Current Prior Period Revaluation Fund Value
Period Net Fund Revaluation Increase Total
Net Income/(Loss) Fund Fund
Income/(Loss)
1 Balances at the 22,091 (276,333) - - - 254,450
beginning of the
period -31.12.2000
2 Foreign exchange - - - - - -
difference
3 Net Income (17,380) - - - - (17,380)
4 Dividend - - - - - -
5 Transferred to legal (22,091) 19,602 - - - -
reserves
6 Bond Convertible to - - - - - -
shares
7 Issuance of share - - - - - -
certificate
Closing Balance of the (17,380) (256,731) - - - 237,070
period -31.12.2001
1 Balances at the (17,380) (256,731) - - - 237,070
beginning of the
period -31.12.2001
Increases in the - -
period :
2 Available for sale - - - - - -
investment
2.1 Net fair value - - - - - -
gain/losses
3 Cash flow hedge: - - - - - -
3.1 Net fair value - - - - - -
gain/losses
4 Foreign exchange - - - - - -
difference
Transferred Amount :
5 Available for sale - - - - - -
investment
5.1 Transferred to net - - - - - -
income
6 Cash flow hedge: - - - - 201 201
6.1 Transferred to net - - - - - -
income
6.2 Transferred to assets - - - - 201 201
7 Net Income 18,514 - - - - 18,514
8 Dividend - - - - - -
9 Transferred to legal 17,380 256,731 - - - -
reserves
10 Issuance of share - - - - - -
certificate
Closing Balance 18,514 - - - 201 255,785
(1+2+3+4+5+6+7+8+9+10)
STATEMENTS OF CASH FLOWS Current Prior Period
Period
Note Ref. 31.12.2001
31.12.2002
A. CASH FLOWS FROM BANKING OPERATIONS
1.1 Operating profit before changes in operating assets and 38,988 960
liabilities(+)
1.1.1 Interest received(+) 334,654 559,544
1.1.2 Interest paid(-) (175,999) (431,611)
1.1.3 Dividend received(+) 6,864 30,220
1.1.4 Fees and commissions received(+) 29,038 29,684
1.1.5 Other income(+) 30,176 31,963
1.1.6 Collections from previously written off loans and other 564 492
receivables(+)
1.1.7 Payments to personnel and service suppliers(-) (44,360) (44,759)
1.1.8 Taxes paid(-) (29,279) (23,983)
1.1.9 Other IX-1 (112,670) (150,590)
1.2 Changes in operating assets and liabilities (109,525) (389,744)
1.2.1 Net (increase) decrease in trading securities(+/-) (15,699) (3,106)
1.2.2 Net (increase) decrease in due from banks and other (132,625) -
financial institutions(+/-)
1.2.3 Net (increase) decrease decrease in loans (216,559) (4,710)
1.2.4 Net (increase) decrease in other assets(+/-) IX-1 (1,245) (29,737)
1.2.5 Net increase (decrease) in bank deposits(+/-) 59,145 (90,729)
1.2.6 Net increase (decrease) in other deposits(+/-) 263,517 389,759
1.2.7 Net increase (decrease) in funds borrowed(+/-) (56,380) (659,161)
1.2.8 Net increase (decrease) in matured payables(+/-) - -
1.2.9 Net increase (decrease) in other liabilities(+/-) IX-1 (9,679) 7,940
I. Net cash provided from banking operations(+/-) (70,537) (388,784)
B. CASH FLOWS FROM INVESTING ACTIVITIES
II. Net cash provided from investing activities(+/-) 10,039 337,661
2.1 Cash paid for purchase of investments, associates and IX-2 (11,228) (16,053)
subsidiaries(-)
2.2 Cash obtained from sale of investments, associates and - -
subsidiaries(+)
2.3 Fixed assets purchases(-) (15,768) (3,032)
2.4 Fixed assets sales(+) 3,778 5,721
2.5 Cash paid for purchase of securities available for sale (16,865) -
(-)
2.6 Cash obtained from sale of securities available for - 234,718
sale (+)
2.7 Cash paid for purchase of investment securities(-) (36,557) (38,573)
2.8 Cash obtained from sale of investment securities(+) 86,679 154,880
2.9 Extraordinary items(+/-) - -
2.10 Other (+/-) - -
C. CASH FLOWS FROM FINANCING ACTIVITIES
III. Net cash provided from financing activities(+/-) (359) (1,721)
3.1 Cash obtained from funds borrowed and securities issued - -
(+)
3.2 Cash used for repayment of funds borrowed and - -
securities issued(-)
3.3 Capital increase(+) - -
3.4 Dividends paid(-) - -
3.5 Payments for finance leases(-) (359) (1,721)
3.6 Extraordinary items(+/-) - -
3.7 Other(+/-) - -
IV. Effect of change in foreign exchange rate on cash and (967) 21,058
cash equivalents
V. Net increase / (decrease) in cash and cash equivalents (61,824) (31,786)
(I+II+III)
VI. Cash and cash equivalents at beginning of the year(+) 1,091,889 1,123,675
VII. Cash and cash equivalents at end of the year 1,030,065 1,091,889
I- FOOTNOTES AND GENERAL EXPLANATIONS ON THE BANK:
a) Commercial name of the Bank : Turk Ekonomi Bankasy Anonim Sirketi (the Bank)
Reporting period : 1 January - 31 December 2002
Adress of the head office : Meclis-i Mebusan Cad. 35, Fyndykly 34427 / YSTANBUL
Telephone number : (0212) 251 21 21
Facsimile number : (0212) 249 65 68
Web page : www.teb.com.tr
E-mail address : @teb.com.tr
b) Bank's service activities and operating areas: Bank's operating areas
include, commercial financing and corporate banking, fund management operations,
retail banking and credit card operations.
c) Bank's group: Turk Ekonomi Bankasy Anonim Sirketi is owned by 70.08%
by TEB Mali Yatyrymlar A.S. (TEB Mali Yatyrymlar) and 8.60% by Colakoolu
Metalurji A.S. and is included in Colakoolu Group.
d) Financial statements and relevant explanations together with the
footnotes are stated in Billions of Turkish Lira.
II- ACCOUNTING PRINCIPLES
1. Basis of Presentation
The Bank prepares its financial statements in accordance with the "Accounting
Application Regulations" (AAR) based on Article 13 named as "Accounting and
Recording System" of the Banking Law 4389 and related communiques and related
explanations and further communiques that add or cause a change on the content
of the relevant communiques.
2. Changes in Accounting Policies and Valuation Methods in the Current
Period
Changes in Accounting Policies
Until September 30, 2002, the Bank's financial statements were being prepared in
accordance with the Uniform Chart of Accounts, standard balance sheet, income
statement, supplementary financial statements and footnotes to these financial
statements and the explanations related to the applications of such financial
statements and the accounting and valuation principles thereto that are based on
the article 13 of the Banking Law 4389 as revised by Law Number 4672 and 4491
and the "Accounting Standard on Financial Statements at Hyperinflation Periods",
Communique No:14, published at Official Gazette dated June 22, 2002 and numbered
24793 and which is related to the "Regulation of Accounting Applications" and
became effective from July 1, 2002. After October 1, 2002, the Bank's financial
statements are prepared in accordance with the accounting policies explained
below and included in both Communique No:14 and the other communiques related to
the Regulation of Accounting Applications effective from October 1, 2002.
Accordingly, assets and liabilities were classified as of October 1, 2002 in
accordance with the provisions of the related communiques and the required
changes for the other accounts were made and the effects of such changes were
reflected to the current year income statement.
3. Accounting Policies
Foreign Currency Assets and Liabilities
Gains or losses arising from foreign currency transactions are reflected in the
statement of income as they are realized during the year. Foreign currency
assets and liabilities at each year-end are translated into Turkish lira at the
year-end foreign exchange buying rates announced by the Bank and the resulting
foreign exchange gains or losses are recorded in the statement of income as
foreign exchange loss, net. The net investment in foreign entities as of the
related year-ends were translated into Turkish lira by applying the exchange
rates prevailing at respective dates. The resulting foreign exchange gains or
losses are recorded in the statement of income.
The differences resulting from the translation of the securities issued and
monetary financial assets into Turkish lira are reflected to the statement of
income.
Explanations on Forward, Option Contracts and Derivative Instruments
The Bank makes forward currency agreements and swap transactions to reduce the
foreign currency risk. In accordance with Communique No:1, "Accounting Standards
of Financial Instruments" of AAR, derivative financial instruments that are not
designated as hedging instruments are classified as held-for-trading and carried
at fair value.
As of December 31, 2002, foreign currency forward and swap transactions were
evaluated by comparing year end Bank foreign exchange rates with the forward
rate amortized to the balance sheet date since the book values approximate their
fair values. The resulting gain or loss is reflected to the income statement.
There are no embedded derivatives separated from the host contract or that are
designated as hedging instruments.
Before the effective date of AAR, above-mentioned transactions had been recorded
by means of arbitrage accounting, the changes at the foreign currencies had been
recorded through evaluation under accounts and the liabilities at the maturity
had been followed under off balance sheet commitments. In order to avoid the
effects of the changes at the rates on the income statement, the amounts
followed under off balance sheet commitments had been evaluated and the
generated differences had been recorded under the income and expense accrual
accounts.
Netting of Financial Assets and Liabilities
There is no netting of financial assets and liabilities.
Interest Income and Expense
Interest income and expense are recognized in the income statement for all
interest bearing instruments on an accrual basis using the effective interest
method. In accordance with the related regulation, the due and not due interest
accruals of the non-performing loans are cancelled and interest income related
to these loans are recorded as interest income only when collected.
Fees and Commission Income and Expense
Commission income and fees for various banking services in the period of
collection.
Fees and commissions for funds borrowed paid to other financial institutions,
which is a part of the transaction costs, are recorded as prepaid expenses and
considered as a part of interest of the related funds borrowed and accordingly,
recorded as expense monthly.
The dividend income is reflected to the financial statements on cash basis when
the profit distribution is realized by the participations and the subsidiaries.
Securities Held for Trading
Trading securities are securities which were either acquired for generating a
profit from short-term fluctuations in price or dealer's margin, or are
securities included in a portfolio in which a pattern of short-term profit
taking exists. Trading securities are initially recognized at cost. Transaction
costs of the related securities are included in the initial cost. The positive
difference occurred between the cost and fair value of the marketable security
is accounted as interest and income accrual. The negative difference occurred is
accounted under marketable security diminution in value account.
Since the foreign currency financial assets held at the same portfolio
(Eurobond) do not hold a price formed in an active market and since the fair
values of these securities could not be determined reliably, they are valued at
amortized cost by using relevant interest rates as stated in the articles 8 and
9 of the AAR's Communique No:1, "Accounting Standards of Financial Instruments."
Sales and Repurchase Agreements and Lending of Securities
The Bank has been following the repurchase agreements made with the clients as a
balance sheet item since February 1, 2002 in accordance with the Uniform Chart
of Accounts. Accordingly, the government bonds and treasury bills sold to
clients under repurchase agreements are recorded under the related securities
account in the financial statements and are valued according to the valuation
principles of the related account. Funds obtained by repurchase agreements are
classified as a separate sub account under money markets account in the
liabilities. The interest expense accruals calculated by means of effective
interest method for the funds obtained by means of repurchase agreements are
reflected to the interest and other expense accruals account in the balance
sheet.
The above-mentioned transactions are short term and consists of domestic public
sector debt securities.
The income and expenses generated from above mentioned operations are reflected
to the "Interest Income on Marketable Securities" and "Interest Expense on
Marketable Securities subject to Repurchase Agreement" accounts in the statement
of income.
As of December 31, 2002, the Bank does not have any reverse repo transactions
(2001 - None).
As of December 31, 2002, the Bank does not have any lent marketable securities
(2001 - None).
Securities Held to Maturity, Securities Available for Sale and Bank Originated
Loans and Receivables
Securities held to maturity are obtained with the intention of holding till the
maturity of the security, and accordingly, including the funding abilities, the
relevant conditions for this exist. This portfolio includes securities with
fixed or determinable payments and with a fixed maturity, excluding bank
originated loans and receivables.
Securities available for sale include all securities other than bank originated
loans and receivables, securities held to maturity and securities held for
trading.
The marketable securities are initially recognized at cost including the
transaction costs.
Foreign currency denominated financial assets included in the available for sale
securities portfolio (Eurobonds) is stated by translating the cost value to
Turkish lira at The Bank's exchange rates. The differences generated from the
translation is reflected to foreign currency gains and losses account at the
relevant period. Since these securities do not hold a price formed in an active
market and since the fair values of these securities could not be determined
reliably, they are valued at amortized cost by using relevant interest rates as
stated in the articles 8 and 9 of the AAR's Communique No:1, "Accounting
Standards of Financial Instruments." The differences between the cost and the
valued amounts are reflected to the income accrual accounts.
Loans and receivables originated by the Bank are those generated by lending
money and exclude those that are held with the intention of trading or selling
in near future.
Held to maturity securities are remeasured at amortized cost by using original
effective interest rate and reserve for impairment in value is provided, if any.
The interests received from securities held to maturity are recorded as interest
income. There are no profit shares.
There are no financial assets that cannot be classified as securities held to
maturity for two years because of tainting rules.
The Bank classifies securities according to above-mentioned portfolios at the
acquisition date of the related security.
The sale and purchase transactions of the securities held to maturity are
recorded at the delivery dates.
Prior to the effective date of AAR, the Bank had initially recorded marketable
securities held with the intention of not selling till maturity (investment
portfolio), which were given as collateral at cost, and the income accruals of
these securities were calculated by straight line method and reflected to the
financial statements.
Participations
Turkish lira participations which are quoted at the stock exchange are valued at
fair value and any positive difference between fair value price and cost is in
included under shareholders' equity in the financial statements. The others are
valued by means of restating their costs and the capital increases after
deducting the ones generated by means of adding the values accumulated at the
revaluation like funds to the capital of the participations, with the rates
applicable for the relevant dates. A provision is provided when there is a
permanent diminution in value.
Subsidiaries
Turkish lira subsidiaries are valued by means of restating their costs and the
capital increases after deducting the ones generated by means of adding the
values accumulated at the revaluation like funds to the capital of the
subsidiaries, with the rates applicable for the relevant dates. Foreign currency
denominated subsidiaries are valued with year-end foreign exchange rates. A
provision is provided when there is a permanent diminution in value.
Originated Loans and Receivables and Provisions for Loan Impairment
The Bank initially records originated loans and receivables at cost, and at the
following periods, in accordance with the AAR, Communique No:1, these loans are
remeasured at amortized cost by means of effective interest rate method. The
taxes, transaction expenses and other expenses paid for the guarantees taken for
the originated loans are taken into consideration while calculating the banks
financing cost and these are reflected to the interest rates of the loans.
Cash loans are recorded in accordance with the regulations stated at the
Communique on the Uniform Chart of Accounts and Its Explanations.
Provision is set for the loans that may be doubtful and the amount is expensed
at the current period. The provisioning criteria for the non-performing loans
are determined by the Bank's management for compensating the probable losses of
the current loan portfolio, by means of evaluating the portfolio for its quality
and risk factors and by means of considering the economical conditions, other
facts and related regulations.
Allowances are computed and reflected in accordance with the Banking Law No.4389
as revised by Law Number 4672 and 4491, Article 3, Sub Article 11 and Article
11, Sub Article 12 published on the Official Gazette No. 24448 dated 30.06.2001
on "Methods and Principles for the Determination of Loans and Other Receivables
to be Reserved for and Allocation of Reserves" amended by Communiques dated
31.01.02 in the current period financial statements. Furthermore, a general
reserve of 0.5% is being provided for the cash loans and other receivables and
0.1 % is provided for non-cash loans. These provisions are reflected to the
statement of income under "Provision and Diminishing in Value Expenses - Special
Provision Expense". The collection made regarding these loans are first deducted
from the principal amount of the loan and the remaining collections are deducted
from interest receivables.
The collections made regarding the current year provision of the above mentioned
loans are deducted from the "Provision for Loans and Other Receivables" account
in the income statement. The collections made related to the previous years'
written-off loans or allowances are recorded under "Other Operating Income"
account and interest incomes are recorded under the "Interest Received from
Non-performing Loans" account.
Release of provision are removed by means of reversing the amount to the "
Provision and Diminishing in Value Expense - Provision Expense" account.
Allowances recorded in the previous periods and lost its necessity in the
current period are credited to "Collections Regarding Previous Year's Expenses"
account.
Goodwill and Other Intangible Fixed Assets
There is no goodwill regarding the participations and subsidiaries. (2001 -
None).
The intangible fixed assets are reflected with their restated costs in
accordance with inflation accounting and depreciated with straight-line method.
The depreciation rate is 20%. The cost of assets subject to depreciation is
restated after deducting the exchange differences, capitalized financial
expenses and revaluation increases, if any, from the cost of the assets.
Major group classified as other intangible fixed assets by the Bank is
softwares. While determining the depreciation periods of these, the essentials
of General Tax Regulations are taken in to consideration and no special criteria
are used. The useful lives of these assets are determined as 5 years. Softwares
mainly used are developed within the Bank by the Bank's personnel, and the
expenses regarding these are not capitalized. Software is purchased only in
emergency cases and for special projects.
There are no expected changes in the accounting estimates about the depreciation
rate and method and residual values for the current and future periods.
Tangible Fixed Assets
Buildings are reflected to the financial statements at their restated costs and
reserve for impairment is provided, if any. In accordance with the Communique
No:14, buildings are valued by real estate expertise companies and the expertise
value is higher than the restated costs at December 31, 2002. The straight-line
method for depreciation is used and economical life is accepted to be 50 years.
Other tangible fixed assets are reflected with their restated cost in accordance
with inflation accounting, and depreciated by straight-line depreciation method.
The depreciation rate is 20%. A prorate basis is used for depreciating assets
held less than one year as of the balance sheet date. The leasehold improvements
are depreciated in accordance with the lease period by means of straight-line
method. The annual rates used, which approximate rates based on the estimated
economic lives of the related assets, are as follow:
%
Buildings 2
Motor vehicles 20
Furniture, fixtures and office equipment 20
Leasehold improvements Lease period-not less than 5 years
Gain profit or loss resulting from disposals of the tangible fixed assets are
reflected to the statement of income as the difference between the net proceeds
and net book value.
The repairment costs of the tangible fixed assets are capitalized if the
operation lengthens the economic life of the asset. Otherwise the repairment
costs are expensed. There are no pledge, mortgage or other restrictions on the
tangible fixed assets.
There are no purchase commitments related to the tangible fixed assets.
There are no expected changes in the accounting estimates, which could have a
significant impact on the current and future periods.
Leasing Transactions
Leasing of fixed assets are recorded in accordance with AAR, Article 7 of the
Communique No:4, "Accounting Standard for Leasing Transactions." In accordance
with the above-mentioned article, the leasing transactions, which consist only
foreign currency liabilities, are translated to Turkish lira with the exchange
rates effective at the transaction dates and they are recorded both as an asset
and a liability. The foreign currency liabilities are translated to Turkish lira
with the Bank's period end exchange rate. The increases resulting from the
differences in the foreign exchange rates are recorded as expense in the
relevant period. Rent payments consist of financing costs generated due to
leasing, and the amount of the leased asset corresponding to the relevant
period. The financing cost resulting from leasing is distributed through the
agreement period to form a fixed interest rate.
In addition to interest expense, the Bank records depreciation expense in each
period for the leased assets. The depreciation rate is determined in accordance
with "Accounting Standard of Tangible Fixed Assets" and the depreciation rate is
20%.
Operating lease expenses are recognized as expense in the income statements in
the periods in which they are incurred.
The Bank has no leasing transactions as lessor.
Provisions and Contingent Liabilities
The provisions and contingent liabilities are determined in accordance with the
Communique No:8 of AAR, except for the general and specific provisions set for
the loans and other receivables. Liabilities generated from previous events are
recorded by the Bank immediately at the estimated amounts.
Employee Rights
In accordance with the existing social legislation, the Bank is required to make
lump-sum termination indemnities including retirement and notice payments to
each employee whose employment is terminated due to resignment or for reasons
other than misconduct. The retirement pay is calculated for every working year
within the Bank over the wage for 30 days and the notice pay is determined by
the relevant notice period time calculated over the years worked within the
Bank. In accordance with AAR, Communique No:10, the Bank sets provision for
retirement and notice pay liabilities by taking the actual payment rates for the
previous 5 years into consideration.
The Bank has no employees contracted for determined periods.
As of December 31, 2002 the arithmetical average of the actual payments realized
for the previous five yeas is 8.44% and this forms the base of the provision
amount that will be set for the retirement and notice pay liabilities.
The Bank employees are members of TEB'LYLER foundation. The Bank does not have
any liability to this foundation.
There are no liabilities that require additional provisions related to other
employee rights.
Taxation
Corporate tax
The corporate tax rate is 30 %, and by means of adding 10% fund share, the
effective tax rate is calculated as 33%. Over the income excluded from the
corporate tax base (excluding participation income) 11% or 19.8% tax is
calculated including the fund share. Additionally, when there is cash profit
distribution, the dividends are subject to 33% corporate tax, is also subject to
income tax at rates of 5% and 15%, respectively, (additionally 10% fund share is
applied) depending on to the fact that the Bank is a public company or not. This
amount is paid by the Bank in the name of the shareholders.
In accordance with the Tax Procedural Code, in every three-month period the tax
assessment is made and the temporary corporate tax is calculated over the income
generated in the three-month period at a rate of 25% and paid in cash. The
corporate tax provision is recorded under "Provisions and Diminishing in Value
Expenses-Tax Provision" account and expensed at every three month period end. At
the corporate tax payment periods, the cash payments made are deducted from the
tax liability calculated over the yearly income and the remaining liability is
paid in cash.
In Turkey, tax returns are filed during the fourth month following the year-end.
According to existing tax regulations, the tax authorities may examine such
returns and the underlying accounting records within five years.
Deferred tax
Certain income and expense items are taxable in periods different from those in
which they are recognized in the financial statements. Deferred taxes on such
timing differences are calculated and reflected in full in the accompanying
financial statements. The Bank does not compute deferred tax on the effects of
inflation accounting.
The deferred tax asset is included in other assets in the accompanying balance
sheet and the deferred tax provision is stated under the tax provision in the
accompanying income statement.
Additional Explanations on Borrowings
The Bank has not issued any debt securities as of December 31, 2002 (2001 -
None).
The Bank has not issued convertible bonds. There is no borrowing instruments
issued by the Bank (2001 - None).
Paid-in Capital and Share Certificates
The Bank does not have any costs related to share issue as of December 31, 2002.
Subsequent to the balance sheet date, there are no announcements regarding
profit distribution.
Acceptances
Acceptances are realized simultaneously with the payment dates of the clients
and they are presented as commitments in off-balance sheet accounts.
There are no acceptances presented as liabilities against any assets. (2001 -
None).
Government Incentives
There are no government incentives utilized by the Bank (2001 - None).
Securities at Custody
Securities at custody held by the Bank on behalf of clients are not reflected to
the financial statements since they are not Bank's assets.
Impairment of Assets
At every balance sheet date, the evidence on impairment in value of assets is
evaluated objectively for existence. When an evidence regarding impairment in
value exists, the market value of the asset is determined. The difference
between book and net realizable values of the asset is recorded as provision for
impairment in the balance sheet and as an expense in the income statement.
Explanation for convenience translation to English:
The accounting principles used in the preparation of the accompanying financial
statements differ from International Financial Reporting Standards (IFRS) and so
far as such differences apply to the financial statements of the Bank they
relate mainly, but not limited, to the format of financial statements and
disclosure requirements, accounting for deferred taxes and reserve for
retirement pay liabilities. The effects of the differences between these
accounting principles and the accounting principles generally accepted in the
countries in which the accompanying financial statements are to be used and IFRS
have not been quantified in the accompanying financial statements. Accordingly,
the accompanying financial statements are not intended to present the financial
position and results of operations in accordance with accounting principles
generally accepted in the countries of users of the financial statements and
IFRS. The Bank's consolidated financial statements prepared in accordance with
the accounting principles and standards that are based on the Article 13 of the
Banking Law number 4389 will be issued separately.
III- INFORMATION ON FINANCIAL STRUCTURE
Strategy for the Use of Financial Instruments and Explanation Regarding the
Foreign Currency Transactions
The Bank aims to develop and market products concerning the needs of its all
kind of client like small sized companies, big sized companies or private
investors, in accordance with Banking Regulations. While fulfilling the clients
needs, the Bank's first priority is to maintain liquidity. Therefore,
approximately 50% of the financial sources created are invested in liquid
products. These investments are made with ultimate care at maturity management
and aiming the maximum income possible under these conditions.
While conducting asset and liability management, the Bank aims to generate a
positive margin between the financing cost and product income and to prevent
maturity mismatch.
As a part of the Bank's risk management strategy, any kind of risk creating
position exceeding the limits given by board of directors generated from
short-term exchange rate, interest and price movements are tried to be prevented
at the Bank's treasury transactions. The Bank's asset and liability management
committee, principally adopts prevention of maturity mismatch and as a pricing
policy, to work with positive balance sheet margin while determining the
short-term, middle and long-term price strategies.
Among the operation areas of the Bank, the main activities generating profit
over expectations are marketable securities transactions.
Board of Directors permits the risks taken at the money, capital and commodity
markets as treasury transactions, and the risk taken is controlled by the
product-based limits.
The strategies for hedging exchange rate risk generated from the Bank's foreign
currency available for sale capital instruments are explained in Exchange Rate
Risk section and the applications regarding the hedging of interest rate risk
generated from deposits with fixed or floating interest rates are explained at
Interest Rate Risk section in detail.
When the asset and liability committee of the Bank decides on investing on,
available for sale capital instruments denominated in foreign currency, which
are suitable for the structure of the balance sheet, the committee also approves
making swaps, foreign currency futures and similar derivative instruments in
order to be able to hedge the changes in interest and exchange rates.
No exchange rate risk generating banking operations are permitted except for
treasury transactions and the risk is hedged by making forward transactions.
The hedging of foreign currency investment in foreign entities are established
by spots and foreign currency forward transactions similar to other foreign
currency transactions, in accordance with the Bank's general strategy to hedge
foreign currency positions within legal limitations.
Capital Adequacy Standard Ratio
The method used for risk measurement for capital adequacy standard ratio is
performed in accordance with the Communique on "Measurement and Assessment of
Banks Capital Adequacies ", which was published on January 31, 2002 in the
Official Gazette numbered 24657. As of December 31, 2002, the Bank's capital
adequacy ratio is % 15.40 (2001 - %13.26).
In the computation of capital adequacy standard ratio, information prepared in
accordance with statutory accounting requirements are used. Additionally, the
market risk amount is calculated in accordance with the communique on the
"Internal Control and Risk Management Systems of the Banks" and is taken in to
consideration in the capital adequacy standard ratio calculation.
The values deducted from the capital in the shareholders' equity computation are
not considered while calculating risk-weighted assets, non-cash loans and
contingent liabilities. Assets subject to depreciation and depletion among
risk-weighted assets are included in the calculations over their net book values
after the relative depreciations and provisions are deducted.
When calculating the basic amounts subject to credit risk regarding the
transactions on the non-cash loans, the net receivable amount from the counter
parties found by means of deducting the provision amount set in accordance with
the "Communique on Methods and Principles for the Determination of Loans and
Other Receivables to be Reserved for and Allocation of Reserves" is multiplied
by the rates presented at the Clause 1, Article 21 of the "Communique on
Regulations on the Establishment and Operations of Banks", and included in the
related risk group and weighted by the related group's risk.
Receivables from counter parties generated from foreign currency and interest
rate transactions are included in the related risk group at the loan conversion
rates stated in Clause 2, Article 21 of the "Communique on Regulations on the
Establishment and Operations of Banks" and weighted for a second time by the
weight of the related risk group.
Information related to the capital adequacy ratio:
Risk Weight
0% 20% 50% 100%
Risk Weighted Assets, Liabilities and Non-Cash Loans
Balance Sheet items (Net) 1,024,774 326,762 8,708 787,494
Cash - -
86,683 -
Due from banks -
342,797 326,530 698
Interbank money market placements - - -
405,982
Receivables from reverse repo transactions - - - -
Reserve deposits - - -
131,905
Special finance houses - - - -
Loans 47,365 - 8,708 740,837
Loans under follow-up (Net) - - - 4,962
Subsidiaries, associates and investments held to - - - -
maturity
Miscellaneous receivables - - - 299
Marketable securities held to maturity (Net) - - - -
Advances for assets acquired by financial leasing - - - -
Financial lease receivables - - - -
Leased assets (Net) - - - -
Fixed assets (Net) - - - 33,817
Other assets 10,042 232 - 6,881
Off balance sheet items 44,763 332,122 240,647 39,110
Guarantees and pledges 42,489 327,696 59,410 23,995
Commitments - - 181,237 -
Other off balance sheet items - - - -
Transactions related with derivative financial - - - 3,160
instruments
Interest and income accruals 2,274 4,426 - 11,955
Non risk weighted accounts - - - -
1,069,537 658,884 249,355 826,604
Total Risk Weighted Assets - 131,777 124,678 826,604
Summary information related to the capital adequacy ratio:
Current Prior
Period Period
Total Risk Weighted Assets 1,102,734 1,044,259
Shareholders' Equity 169,817 138,426
Shareholders' Equity / Total risk weighted assets (CAR (%)) 15.40 13.26
(*) As of December 31, 2002 the amount includes TL 19,675 (2001 - TL
77,828) of market risk amount.
Information related to the shareholders' equity components :
Current Prior Period
Period
MAIN CAPITAL
Paid-in Capital 55,125 55,125
Nominal capital 55,125 55,125
Capital commitments (-) - -
Effect on Inflation Accounting on Share Capital 181,945 405,554
Share Premium - -
Legal Reserves - 50,502
First legal reserve (Turkish Commercial Code 466/1) - 49,383
Second legal reserve (Turkish Commercial Code 466/2) - -
Other legal reserve per special legislation - 1,119
Statute Reserves - -
Extraordinary reserves - -
Reserves allocated by the General Assembly - -
Retained earnings - -
Accumulated loss - -
Foreign currency share capital exchange difference - -
Profit 18,514 -
Current period profit 18,514 -
Prior period profit - -
Loss (-) - (274,111)
Current period loss
- (17,380)
Prior period loss - (256,731)
Total Main Capital 255,584 237,070
SUPPLEMENTARY CAPITAL - -
Revaluation Fund - -
Furniture, fixture and vehicles - -
Buildings - -
Profit on sale of associates, subsidiaries and buildings to be transferred to share - -
capital
Revaluation fund of leasehold improvement - -
Increase in the Value of Revaluation Fund - -
Foreign Exchange Differences - -
General Reserves 6,093 4,828
Provisions for Possible Losses - -
Subordinated Loans 24,596 -
Marketable Securities and Investment Securities Value Increase Fund 201 -
Associates and subsidiaries 201 -
Available for sale securities - -
Structured positions -
Total Supplementary Capital 30,890 4,828
TIER III CAPITAL - -
CAPITAL 286,474 241,898
DEDUCTIONS FROM THE CAPITAL 116,657 103,472
Investments in unconsolidated financial companies whose main activities are money
and capital markets, insurance and that operate with licenses provided in
accordance with special laws 106,815 94,715
Leasehold improvements 6,381 7,090
Start-up costs
Prepaid expenses 3,461 1,667
The negative difference between the market values and the carrying amounts for
unconsolidated investments, subsidiaries, other investments and fixed assets - -
Subordinated loans given to other banks which operate in Turkey - -
Goodwill (Net) - -
Capitalized expenses - -
Total Shareholder's Equity 169,817 138,426
Credit Risk
Credit risk represents the risk generating from the counter party's not
fulfilling its responsibilities stated in the agreement either partially or
totally.
Sectoral risk limitations are imposed on debtors individually or as a group in
accordance with the credit risk, but risk limitations are not imposed according
to geographical regions. The rating of the firms, credit limit and guarantee
acceptance processes are taken into consideration all together in accordance
with conservative lending policies applied by the Loan Lending and Risk Follow
up Group, and, accordingly the follow up of credit risk is established.
The risks and limits generated from treasury and client based commercial
transactions are followed up daily. Additionally, the control of the limits of
the correspondent banks is determined by their ratings and the control of the
accept risk level according to the Bank's equity are performed daily. Risk
limits are determined for the transactions taking place daily and the risk
concentration of the off-balance sheet transactions are followed up by the
system.
The credibility of the debtors of the Bank is assessed periodically in
accordance with the "Communique on Methods and Principles for the Determination
of Loans and Other Receivables to be Reserved for and Allocation of Reserves."
Majority of the accepted statements presenting the financial position of the
borrowers are audited statements. The reason for accepting unaudited financials,
is the timing differences between the lending of the money and the audit period
of the borrowers. The accepted unaudited financials are replaced with the
audited ones when they become available. The loan limits are determined based on
the audited financials and the guarantees are determined by the loan committee
according to the borrowers' financial structure and the quality of the
transactions.
Transaction limits for the forward and other similar agreement positions held by
the Bank is determined by the Board of Directors and transactions take place
within these limits.
The fulfillment of liabilities in the forward agreements are only possible at
the maturity of the agreement. However, in order to be able to minimize the
risk, reverse positions of the present positions are taken from the market and
by means of that the risk is closed.
Indemnified non-cash loans are weighted in the same risk group with the
non-performing loans.
Since the volume of the restructured loans is not material to the financial
statements, no additional follow up methodology is developed, except as stated
in the regulations.
Foreign country and institution risks of the Bank are generally determined for
foreign countries and institutions, which are considered at the investment
level, in other words, which are stated as carrying minimum level of default
risk by the international rating companies. Accordingly, the likely risks that
may occur are minor risks when the financial structure of the Bank is
considered.
The Bank does not hold a major credit risk when compared to other financial
institutions together with their financial activities as an active participant
at the international banking market.
The total loan balance of the top 100 cash loan clients of the Bank is TL
410,830 (2001- TL 352,341) and the percentage to the total loan portfolio is
51.55% (2001- 60.97 %).
The total balance of the top 100 non-cash loan clients of the Bank is TL 417,407
(2001- TL 493,767) and the percentage to the total non-cash loan portfolio is
51.66% (2001- 62.72 %).
As of December 31, 2002, the percentage of the total cash and non-cash loans
balances of the top 100 clients to the total of assets and off-balance sheet
items is 26.04% (2001- 29.32 %).
As of December 31,2002, general provision for loans amounted to TL 6,093 (2001 -
TL 4,828).
Information according to geographical concentration:
Non-Cash Capital Net Profit/
Loans Investments Loss
Assets Liabilities
Current Period
Domestic 2,062,421 1,828,311 795,069 63,068 18,514
European Union Countries 138,635 93,612 11,684 43,747 -
OECD Countries * 8,555 14,294 - - -
Off-shore Banking Regions 562 39,403 - - -
USA, Canada 55,777 111,821 - - -
Other Countries 417 29,956 1,156 - -
Unallocated Assets/liabilities** - - - - -
Total 2,266,367 2,117,397 807,909 106,815 18,514
Prior Period
Domestic 1,803,989 1,496,056 755,575 58,749 (17,380)
European Union Countries 40,367 170,702 14,240 35,966 -
OECD Countries * 2,994 26,626 328 - -
Off-shore Banking Regions - 30,195 - - -
USA, Canada 156,750 138,472 17,115 - -
Other Countries 306 - - - -
Unallocated Assets/liabilities** - - - - -
Total 2,004,406 1,862,051 787,258 94,715 (17,380)
* OECD Countries other than EU countries, USA and Canada
** Unallocated assets / liabilities which could not be distributed
according to a consistent criteria.
Sectoral Breakdown of Cash Loans :
Current Period Prior Period
TL (%) FC (%) TL (%) FC (%)
Agricultural 7,095 2.02 15,885 3.56 6,880 2.72 10,310 3.18
Farming and raising livestock 2,586 0.74 288 0.06 5,020 1.98 8,999 2.77
Forestry 4,462 1.27 15,597 3.50 1,841 0.73 1,311 0.41
Fishing 47 0.01 - - 19 0.01 - -
Manufacturing 189,051 53.85 271,293 60.85 163,822 64.67 252,676 77.84
Mining 19,768 5.63 34,988 7.85 506 0.20 - -
Production 169,008 48.14 236,305 53.00 150,105 59.25 252,676 77.84
Electric, gas and water 275 0.08 - - 13,211 5.22 - -
Construction 9,135 2.60 1,333 0.30 2,859 1.13 3,616 1.11
Services 115,687 32.95 147,357 33.06 58,996 23.28 48,115 14.82
Wholesale and retail trade 39,572 11.27 101,446 22.75 13,635 5.38 28,438 8.76
Hotel, food and beverage 1,494 0.42 - - 844 0.33 662 0.20
services
Transportation and 9,444 2.69 5,319 1.20 4,187 1.66 5,164 1.59
telecommunication
Financial institutions 57,577 16.40 40,421 9.07 15,002 5.92 13,173 4.06
Real estate and renting 69 0.02 - - 1,552 0.61 204 0.06
services
Self-employment services 3,365 0.96 171 0.04 - - - -
Education services 622 0.18 - - 232 0.09 - -
Health and social services 3,544 1.01 - - 23,544 9.29 474 0.15
Other 30,123 8.58 9,951 2.23 20,768 8.19 9,880 3.05
Total 351,091 100.00 445,819 100.00 253,325 100.00 324,597 100.00
Market Risk
The Bank has determined market risk management operations and has taken the
necessary precautions in order to hedge market risk within its financial risk
management purposes, in accordance with the Communique on "Internal Control and
Risk Management Systems of Banks" announced in the Official Gazette dated
February 8, 2001.
The interest rate and exchange rate risks of the financial positions taken by
the Bank related to balance sheet and off-balance sheet accounts are measured
and while calculating the capital adequacy, the amount subject to VAR is taken
into consideration by the standard method. Scenario analysis and stress tests
are used additionally in market risk computations.
In order to measure the market risk of the Bank, the Board of Directors has
determined risk management strategies in accordance with the proposals of the
Top Management Risk Committee and these strategies are forced to be followed up
periodically. The Board of Directors evaluates the basic risks faced and
determines limitations accordingly. The limits are revised periodically.
Additionally the Board of Directors has urged the risk management group and the
top management to take necessary precautions to consider, evaluate, control and
to control the variety of risks the Bank faces.
Amount
Capital to be employed for interest rate risk - standard method 1,286
Capital to be employed for general market risk 1,286
Capital to be employed for specific risk -
Capital to be employed for options subject to interest rate risk -
Capital to be employed for common stock position risk - Standard method -
Capital to be employed for general market risk -
Capital to be employed for specific risk -
Capital to be employed for options subject to common stock position risk -
Capital to be employed for currency risk - Standard method 288
Capital liability 288
Capital to be employed for options subject to currency risk -
Total Value-at-risk (VAR)-Internal Model -
Total capital to be employed for market risk 1,574
Amount subject to market risk 19,675
Foreign Currency Risk
Foreign currency risk indicates the possibilities of the potential losses that
banks are subject to due to the exchange rate movements in the market. While
calculating the share capital requirement, all foreign currency assets,
liabilities and forward transactions of the Bank are taken into account. Net
short and long position of Turkish Lira equivalent of each foreign currency is
calculated. The value, which will be a base for calculating the share capital
requirement, is computed by taking the higher absolute value of the position by
adding to absolute net gold position. Share capital requirement is computed over
of this amount. The Board of Directors sets limits for the positions, which are
followed up daily. Additionally, possible value changes in the existing or
possible foreign currency positions are observed together with the follow-up of
the foreign currency risk in accordance with the provisions of the "Communique
on Internal Control and Risk Management Systems of Banks".
As an element of the Bank's risk management strategies, foreign currency
liabilities are hedged against exchange rate risk by derivative instruments.
The Board of Directors of the Bank determines the short position limits that the
Bank can hold in accordance with the present legal limitations. The Treasury
Department of the Bank is responsible for the management of Turkish Lira or
foreign currency price, liquidity and affordability risks that could occur in
the domestic and international markets. The Risk Control Department continuously
controls risk and risk related transactions occurring in the money markets and
prepares weekly reports for the Bank's Asset-Liability Committee. The related
principles and limitations of the counterparties are determined by the Loan
Committee. The limits concerning the maturity structure of the foreign currency
transactions and interest rates are examined by the Asset-Liability Committee.
As of December 31, 2002, the Bank's net short position is TL 654 (2001- TL 401
long) resulting from short position amounting to TL 37,361 (2001- TL 1,480) on
the balance sheet and long position amounting to TL 36,707 (2001- TL 1,881) on
the off-balance sheet.
The announced current foreign exchange buying rates of the Bank at the balance
sheet date and the previous five working days are as follows:
24/12/02 25/12/02 26/12/02 27/12/02 30/12/02 31/12/02
USD 1,669,897 1,649,711
1,633,732 1,651,207 1,634,501 1,639,745
CHF 1,179,075 1,171,950 1,163,081 1,180,579
1,176,781 1,169,633
GBP 2,657,574 2,631,386 2,608,675 2,640,240
2,643,345 2,618,888
JPY 13,866 13,682 13,792
13,580 13,741 13,678
EUR 1,717,823 1,701,512 1,691,403 1,718,945
1,714,448 1,703,477
The simple arithmetical average of the major current foreign exchange buying
rates of the Bank for the thirty days before the balance sheet date is as
follows:
Monthly Average
FX rate
USD 1,580,651
CHF 1,095,840
GBP 2,504,824
JPY 12,951
EUR 1,610,082
Information on the foreign currency risk of the Bank:
Current Period EUR USD YEN OTHER FC TOTAL
Assets
Cash (cash in vault, foreign currency cash, money in
transit, cheques purchased) and balances with the
Central Bank of Turkey 29,316 374,451 65 4,789 408,621
Due from other banks and financial institutions 74,815 172,128 1,257 56,018 304,218
Trading securities (**) 288 2,598 - 272 3,158
Investment securities available-for-sale - - 16,856 - 16,856
Loans (**) 185,580 317,422 - 23,223 526,225
Investments in subsidiaries and participations 43,747 - - - 43,747
Investment securities held-to-maturity - - - - -
Property and equipment - - - - -
Goodwill - - - - -
Other assets 21,881 283,413 358 937 306,589
Total Assets 355,627 1,150,012 18,536 85,239 1,609,414
Liabilities
Bank deposits 4,281 12,996 3 24,355 41,635
Foreign currency deposits (*) 232,805 1,010,452 200 49,572 1,293,029
Funds provided from other financial institutions 2,993 268,431 - 264 271,688
Marketable securities issued - - - - -
Miscellaneous payables 21,673 1,540 - 1,422 24,635
Other liabilities 4,106 11,069 - 613 15,788
Total liabilities 265,858 1,304,488 203 76,226 1,646,775
Net Balance Sheet Position 89,769 (154,476) 18,333 9,013 (37,361)
Net Off-Balance Sheet Position (88,802) 151,320 (18,082) (7,729) 36,707
Financial derivative assets 63,758 210,078 - 613 273,836
Financial derivative liabilities 152,560 58,758 18,082 7,729 237,129
Non-cash loans 165,408 351,549 6,689 22,349 545,995
Prior Period
Total Assets 294,176 1,146,184 352 58,853 1,499,565
Total Liabilities 267,468 1,173,928 363 59,286 1,501,045
Net Balance Sheet Position 26,708 (27,744) (11) (433) (1,480)
Net Off-Balance Sheet Position 4,878 (3,124) 72 55 1,881
Non-cash loans 141,339 386,105 2,534 20,865 550,843
(*) Gold account deposits amounting to TL 22,455 are included in the
foreign currency deposits.
(**) Foreign currency indexed government bonds and treasury bills amounting
to TL 218 are included in the trading portfolio and foreign currency indexed
loans amounting to TL 80,406 are included in the loan portfolio.
Interest Rate Risk
Interest rate risk shows the loss probability related to the changes in the
interest rates depending on the Bank's position, and it is managed by the
Treasury Department. The interest rate sensitivity of assets, liabilities and
off-balance sheet items related to this risk are measured by using the standard
method. The first step at calculation of interest rate risk, is to place the
instruments subject to interest rate risk in the appropriate one of the 13
maturity sections according to the remaining time to maturity or to the
repricing. At the second step, the instruments with variety of maturities are
weighted according to their risks for reflecting the interest rate risk
volatilities that match their maturities.
The first priority of the Bank's risk management is to protect from interest
rate volatility. All types of sensitivity analysis performed within the context
is calculated by the risk management and reported to the Asset-Liability
Committee.
Work is performed regarding interest income according to the macro economical
indicators in the Bank's budget estimations and the effects of the market
interest fluctuations on the financial position and cash flow are purified at
the maximum level possible by means of target revisions.
The Bank management follows the market interest rates daily and determines the
interest rates of the Bank when necessary.
Since the Bank does not permit or imposes limits, on maturity mismatches it is
not expected that the Bank will face a significant interest rate risk.
Information related to the interest rate sensitivity of assets, liabilities and
off-balance sheet items based on repricing dates):
Up to 1 1-3 3-6 6-12 1 Year and
Months Months Months Months Over Demand Total
Current Period
Assets
Cash (cash in vault, foreign
currency cash, money in transit,
cheques purchased) and balances
with the Central Bank of Turkey 474,701 - - - - 86,915 561,616
Due from banks and other
financial institutions 647,408 11,000 8,000 2,562 - 64,240 733,210
Trading securities 2,528 12,656 6,209 5,885 384 272 27,934
Securities available-for-sale - 16,856 - - - 9 16,865
Loans 327,142 160,887 213,800 53,889 41,192 - 796,910
Securities held-to-maturity 207 36,350 - - - - 36,557
Other assets - - - - - 200,090 200,090
Total Assets 1,451,986 237,749 228,009 62,336 41,576 351,526 2,373,182
Liabilities
Bank deposits 58,780 164 1,000 - - - 59,944
Other deposits 1,487,696 119,292 10,307 13,853 395 - 1,631,543
Miscellaneous payables - - - - - 35,487 35,487
Marketable securities issued - - - - - - -
Funds provided from other 4,080 183,615 17,735 82,203 - - 287,633
financial institutions
Other liabilities 109 348 562 943 4,786 351,829 358,575
Total Liabilities 1,550,665 303,419 29,604 96,999 5,181 387,316 2,373,182
Balance Sheet Interest (98,679) (65,670) 198,405 (34,663) 36,395 (35,788) -
Sensitivity Gap
Off Balance Sheet Interest - - - - - - -
Sensitivity Gap
Total Interest Sensitivity Gap (98,679) (65,670) 198,405 (34,663) 36,395 (35,788) -
The other asset line at the without interest column consists of TL 37,234 amount
tangible fixed assets, TL 2,964 of intangible fixed assets, TL 5,643 of
participations and TL 101,172 of subsidiaries and the other liability line
consists equity total amounting to TL 255,785.
Up to 1 1-3 3-6 6-12 1 Year Demand Total
and Over
Month Month Months Months
Prior Period
Assets
Cash (cash in vault, foreign
currency cash, money in transit,
cheques purchased) and balances
with the Central Bank of Turkey 135,986 - - - - 165,829 301,815
Due from banks and other financial 916,797 5,678 - - - 1,451 923,926
institutions
Trading securities - 4 7,849 4,184 - 196 12,233
Investment securities - - - - - - -
available-for-sale
Loans 228,528 145,221 110,068 65,307 28,798 577,922
Investment securities 17,566 30,269 38,837 - - 7 86,679
held-to-maturity
Other assets - - - - - 196,546 196,546
Total Assets 1,298,877 181,172 156,754 69,491 28,798 364,029 2,099,121
Liabilities
Banks deposits 23,404 196 - - - - 23,600
Other deposits 1,263,703 91,264 11,858 1,201 - - 1,368,026
Miscellaneous payables - - - - - 42,876 42,876
Marketable securities issued - - - - - - -
Funds provided from other 78,389 200,996 62,886 1,742 - - 344,013
financial institutions
Other liabilities 166 279 427 943 1,810 316,981 320,607
Total Liabilities 1,365,662 292,735 75,171 3,886 1,810 359,857 2,099,121
On Balance Sheet Interest (66,785) (111,563) 81,583 65,605 26,988 4,172 -
Sensitivity Gap
Off Balance Sheet Interest - - - - - - -
Sensitivity Gap
Total Interest Sensitivity Gap (66,785) (111,563) 81,583 65,605 26,988 4,172 -
Average interest rates applied to monetary financial instruments:
EURO USD Yen TL
% % % %
Current Period
Assets
Cash (cash in vault, foreign currency cash, money in
transit, cheques purchased) and balances with the Central
Bank of Turkey 1.43 0.55 - 25.00
Due from banks and other financial institutions 3.25 1.26 - 45.62
Trading securities 8.10 3.62 - 56.49
Securities available-for-sale - - 3.50 -
Loans 5.58 6.00 - 51.48
Securities held-to-maturity - - - 44.35
Liabilities
Bank deposits 2.75 2.75 - 42.49
Other deposits 2.41 2.59 - 43.01
Miscellaneous payables - - - -
Marketable securities issued - - - -
Funds provided from other financial institutions 5.65 2.88 - 47.43
Liquidity Risk
Liquidity risk occurs when there is not sufficient amount of cash or cash flows
to fulfill the cash outflows completely and on time, resulting from the unstable
cash inflows.
Liquidity risk may occur when the market penetration is not enough, when the
open positions cannot be closed urgently with a suitable price and sufficient
amount due to barriers and break-ups at the markets.
The Bank's policy is to establish a liquid asset structure that can afford all
kinds of liabilities by liquid sources. In this scope liquidity problem does not
happen at any period. The Board of Directors of the Bank continuously determines
the liquidity ratios and related standards, and controls them, in order to keep
this structure.
There is a system worked on to apply international measurement methods. However,
according to the general policies of the Bank, the adaptation of the assets,
liabilities, the interest rates to the payments are always established within
the asset liability management strategies. A positive difference is tried to be
established between the yields of TL and foreign currency assets and liabilities
at the balance sheet and their costs. According to this strategy, the Bank pays
special attention not to take maturity risk, and no banking service is marketed
when the price is lower than the financing cost.
When the funding and liquidity sources are considered, the Bank covers majority
of its liquidity need by deposits, and in addition to this source, it makes use
of prefinancing and syndication products to generate additional sources.
Generally the Bank does not prefer to utilize liquidity from interbank money
markets and is in a net lender position in interbank money markets.
Presentation of assets and liabilities according to their remaining maturities :
1-3 3-6 6-12 1 Year and Total
Months Months Months Over
Current Period Demand (**) (*)
Assets
Cash (cash in vault, foreign currency
cash, money in transit, cheques
purchased) and Balances with the Central
Bank of Turkey 561,616 - - - - 561,616
Due from banks and other financial 711,648 11,000 8,000 2,562 - 733,210
institutions
Trading securities 367 124 5,821 5,783 15,839 27,934
Securities available-for-sale 9 16,856 - - - 16,865
Loans 327,142 160,887 213,800 53,889 41,192 796,910
Securities held-to-maturity 207 - - - 36,350 36,557
Other assets 11,587 7,333 15,532 7,889 1,769 200,090
Total Assets 1,612,576 196,200 243,153 70,123 95,150 2,373,182
Liabilities
Bank deposits 58,780 164 1,000 - - 59,944
Other deposits 1,487,696 119,292 10,307 13,853 395 1,631,543
Funds provided from other financial 4,080 19,641 37,958 163,974 61,980 287,633
institutions
Marketable securities issued - - - - -
-
Miscellaneous payables 32,999 2,488 - - - 35,487
Other liabilities 91,451 2,619 2,039 1,828 260,638 358,575
Total Liabilities 1,675,006 144,204 51,304 179,655 323,013 2,373,182
Net Liquidity Gap (62,430) 51,996 191,849 (109,532) (227,863) -
Prior Period
Total Assets 1,515,203 164,152 140,373 119,716 29,138 2,099,121
Total Liabilities 1,413,658 121,289 77,707 194,687 291,780 2,099,121
Net Liquidity Gap 101,545 42,863 62,666 (74,971) (262,642) -
(*) The maturity of up to 1 month of Interbank funds sold amounting to TL
405,982, loans amounting to TL 201,961, and domestic and foreign banks
placements amounting to TL 196,040 are shown in the demand column. Furthermore,
demand deposits amounting to TL 936,031 is included in the other deposits and
shown at the demand columns.
(**) Total column includes other assets amounting to TL 155,980 consists of
subsidiaries and participations, tangible and intangible fixed assets amounting
to TL 147,013 and the remaining amount is loans in follow-up, prepaid expenses
and these are not taken in to consideration at the maturity distribution. Other
liabilities which matures up to 1 year and over includes shareholders' equity
amounting to TL 255,785.
Presentation of assets and liabilities with their fair values :
The table below presents fair values and book values of financial assets and
liabilities which are not reflected at their fair values in the financial
statements.
Securities held for investment purposes at the current period consists of
interest bearing held to maturity assets. The fair value of the held to maturity
assets are determined based on the market value or if the market value cannot be
determined, the fair values are determined based on the presented market prices
of the other marketable securities which are similar in interest rates,
maturities and other conditions.
The approximate fair value of the demand deposits is the amount payable under
demand. The fair values of the floating rate placements and overnight deposits
are considered to be the book values due to short maturities. The approximate
fair value of the deposits with fixed rates and funds collected from other
financial institutions are determined by calculating discounted cash flows by
making use of the money market interest rates used for other liabilities with
similar quality and maturities. The fair value is presented by the book value of
the other payables due to short maturity.
Book Value Fair Value
Current Prior Period Current Prior Period
Period Period
Financial Assets 786,542 1,014,436 787,337 1,017,087
Due from banks and other financial institutions 733,210 923,916 733,210 923,916
Securities available-for-sale 16,865 - 16,865 -
Securities held-to-maturity (*) 36,557 86,679 35,968 91,869
Financial Liabilities 2,037,407 1,778,515 2,037,407 1,778,515
Interbank money market deposits (*) 59,944 23,600 60,137 23,762
Other deposits (*) 1,631,543 1,368,026 1,637,066 1,372,514
Funds provided from other financial institutions 310,433 344,013 313,467 347,350
(*)
Marketable securities issued - -
Miscellaneous payables 35,487 42,876 35,487 42,876
(*) Book values do not include interest accruals as of related period
ends.
Transactions Made in the Name and Account of the Third Parties, Fiduciary
Transactions
The Bank makes purchases from adjudications in the account of the clients, and
gives keeping, management and consultancy services.
The bank has no fiduciary transactions.
Operating Segments
The Bank operates in private banking services, private client current accounts,
deposit accounts, products enabling long term investments, exchange and keeping
services, loan and atm cards, consumer loans and long term housing loans and at
other private banking service areas.
As corporate banking services, corporate banking operations including products
like, automated transfer services, current accounts, deposit accounts, open loan
transactions, lending and other loan services, future and option agreements and
other similar agreements are serviced to meet the needs and expectations of the
domestic and foreign companies with relatively higher gross incomes.
The Bank does not operate in investment banking.
Segment reporting will begin as of January 1, 2004.
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This information is provided by RNS
The company news service from the London Stock Exchange
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