RNS Number:0359L
Turk Ekonomi Bankasi A.S.
13 May 2003
Turk Ekonomi Bankasi
Anonim Sirketi
Consolidated 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 III, NOTE XXV)
(Convenience Translation of A Report And Financial Statements
Originally Issued In Turkish - See Section III, Note XXV)
TURK EKONOMI BANKASI ANONIM SIRKETI
REPORT OF INDEPENDENT AUDITORS'
AS OF DECEMBER 31, 2002
We have audited the consolidated balance sheet of Turk Ekonomi Bankasi Anonim
Sirketi and its subsidiraries as of December 31, 2002 and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the year then ended. These consolidated 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 consolidated financial statements present
fairly, in all material respects, the consolidated financial position of Turk
Ekonomi Bankasi Anonim Sirketi and its subsidiaries at December 31, 2002 and
the results of its consolidated 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.
Guney Serbest Muhasebeci Mali Musavirlik Anonim Sirketi
An Affiliated Firm of Ernst & Young International
Esra Peri, SMMM
March 27, 2003
Istanbul, Turkey
INDEX
SECTION ONE Page no.
General Information
I. Footnotes and Explanations on the Parent Bank's Service Activities and Operating Areas 1
II. The Explanations and Footnotes Regarding the Including Group of the Parent Bank 1
SECTION TWO
Consolidated Financial Statements
I. Consolidated Balance Sheets - Assets 3
II. Consolidated Balance Sheets - Liabilities 4
III. Consolidated Statements of Income 5
IV. Consolidated Statements of Off Balance Sheet Commitments 6
V. Consolidated Statements of Changes in Shareholders' Equity 7
VI. Consolidated Statements of Cash Flows 8
SECTION THREE
Accounting Principles
I. Basis of Presentation 9
II. Presentation of the Information Regarding the Parent Bank and the Group Companies Included in the
Consolidation 9
III. Explanations on Forward, Option Contracts and Derivative Instruments 11
IV. Netting of Financial Assets and Liabilities 11
V. Interest Income and Expense 11
VI. Fees and Commission Income and Expense 11
VII. Securities Held for Trading 12
VIII. Sales and Repurchase Agreements and Lending of Securities 12
IX. Securities Held to Maturity, Securities Available for Sale and Bank Originated Loans and
Receivables 12
X. Unconsolidated Participations and Subsidiaries 13
XI. Originated Loans and Receivables and Provisions for Loan Impairment 13
XII. Goodwill and Other Intangible Fixed Assets 14
XIII. Tangible Fixed Assets 15
XIV. Leasing Transactions 15
XV. Provisions and Contingent Liabilities 16
XVI. Liabilities Regarding Employee Benefits 16
XVII. Taxation 16
XVIII. Additional Explanations on Borrowings 17
XIX. Paid-in Capital and Share Certificates 17
XX. Acceptances 17
XXI. Government Incentives 17
XXII. Securities at Custody 17
XXIII. Impairment of Assets 17
XXIV. Segment Reporting 17
XXV. Other Matters 18
SECTION FOUR
Information on Consolidated Financial Structure
I. Strategy for the Use of Financial Instruments and Explanation Regarding the Foreign Currency
Transactions 19
II. Consolidated Capital Adequacy Standard Ratio 19
III. Consolidated Credit Risk 22
IV. Consolidated Market Risk 24
V. Consolidated Foreign Currency Risk 24
VI. Consolidated Interest Rate Risk 26
VII. Consolidated Liquidity Risk 29
VIII. Presentation of Assets and Liabilities with Their Fair Values 30
IX. Transactions Made in the Name and Account of the Third Parties, Fiduciary Transactions 30
X. Operating Segments 30
SECTION FIVE
Footnotes and Explanations on Consolidated Financial Statements
I. Footnotes and Explanations Related to the Consolidated Assets 32
II. Footnotes and Explanations Related to the Consolidated Liabilities 47
III. Footnotes and Explanations Related to the Consolidated Income Statement 54
IV. Footnotes and Explanations Related to the Consolidated Off-balance Sheet Commitments 57
V. Footnotes and Explanations Related to the Consolidated Statement of Shareholders' Equity 61
VI. Footnotes and Explanations Related to the Consolidated Statement of Cash Flows 62
VII. Footnotes and Explanations Related to Mergers, Aquisitions of Banks, and the Recording
Principles of Aquisitions of Subsidiaries 63
VIII. Footnotes and Explanations on the Risk Group of the Parent Bank 64
IX. Footnotes and Explanations on Inflation Accounting 66
X. The Information on the Parent Bank's Domestic, Foreign, Off-shore Branches and Foreign
Representatives 68
XI. Explanations Related to Subsequent Events 68
SECTION SIX
Other Footnotes and Explanations
I. Other Explanations Regarding the Parent Bank 68
SECTION SEVEN
Report of Independent Auditors
I. Explanations on the Report of Independent Auditors 69
SECTION ONE
GENERAL INFORMATION
I- Footnotes and Explanations on the Parent Bank's Service Activities and
Operating Areas
a) Commercial name of the Bank : Turk Ekonomi Bankasi Anonim Sirketi (the Bank)
Reporting period : 1 January - 31 December 2002
Address of the head office : Meclis-i Mebusan Cad. 35, Findikli 34427 / ISTANBUL
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) The Parent Bank's service activities and operating areas: The Parent
Bank's operating areas include, commercial financing and corporate banking,
fund management operations, retail banking and credit card operations.
c) Financial statements and relevant explanations together with the footnotes
are stated in Billions of Turkish Lira.
II. The Explanations and Footnotes Regarding the Including Group of the
Parent Bank
The Group of the Parent Bank: Turk Ekonomi Bankasi Anonim Sirketi ("the Bank")
is included in the Colakoglu Group. 70.08% of the shares of the Bank belongs to
TEB Mali Yatirimlar Anonim Sirketi (TEB Mali Yatirimlar) and 8.60% of the shares
belongs to Colakoglu Metalurji Anonim Sirketi.
SECTION TWO
CONSOLIDATED FINANCIAL STATEMENTS
I. Consolidated Balance Sheets - Assets
II. Consolidated Balance Sheets - Liabilities
III. Consolidated Statements of Income
IV. Consolidated Statements of Off Balance Sheet Commitments
V. Consolidated Statements of Changes in Shareholders' Equity
VI. Consolidated Statements of Cash Flows
I- CONSOLIDATED BALANCE SHEET
Current Period Prior Period
31.12.2002 31.12.2001
ASSETS Note Ref.
(Section TL FC Total TL FC Total
Five)
I. CASH AND 20,942 408,631 429,573 8,757 178,803 187,560
BALANCES WITH
THE CENTRAL
BANK OF
TURKEY
1.1 Cash - 6,142 - 6,142 6,237 - 6,237
1.2 Foreign - - 80,634 80,634 - 177,001 177,001
currency
1.3 Balances with I-1 14,800 327,997 342,797 2,520 1,802 4,322
the Central
Bank of
Turkey
II. TRADING 14,800 9,533 50,062 7,921 8,045 15,966
SECURITIES
(Net)
2.1 Public sector I-2 40,529 9,261 49,790 7,921 8,045 15,966
debt
securities
2.1.1 Government I-2 34,787 6,593 41,380 7,921 8,045 15,966
bonds
2.1.2 Treasury I-2 5,741 - 5,741 - - -
bills
2.1.3 Other I-2 1 2,668 2,669 - - -
2.2 Share - - - - - - -
certificates
2.3 Other - - 272 272 - - -
marketable
securities
III. BANKS AND 39,070 996,376 1,035,446 6,502 527,365 533,867
OTHER
FINANCIAL
INSTITUTIONS
3.1 Due from - 39,070 996,376 1,035,446 6,502 527,355 533,857
banks
3.1.1 Domestic - 27,653 178,682 206,335 6,137 63,346 69,483
banks
3.1.2 Foreign banks I-3 11,417 817,694 829,111 365 464,009 464,374
3.2 Other - - - - - 10 10
financial
institutions
IV. MONEY MARKET 234,301 178,732 413,033 137,251 535,657 672,908
PLACEMENTS
4.1 Interbank - 227,250 178,732 405,982 137,251 535,657 672,908
money market
placements
4.2 Istanbul - - - - - - -
Stock
Exchange
money market
placements
4.3 Receivables I-4 7,051 - 7,051 - - -
from reverse
repurchase
agreements
V. SECURITIES 9 16,856 16,865 - - -
AVAILABLE FOR
SALE (Net)
5.1 Share I-5 9 - 9 - - -
certificates
5.2 Other I-5 - 16,856 16,856 - - -
marketable
securities
VI. LOANS 360,424 953,050 1,313,474 272,264 922,241 1,194,505
6.1 Short term I-6 334,601 780,310 1,114,911 235,601 830,333 1,065,934
6.2 Medium and I-6 20,861 172,740 193,601 20,936 91,908 112,844
long term
6.3 Loans under I-6 20,212 40 20,252 22,641 - 22,641
follow-up
6.4 Specific I-6 (15,250) (40) (15,290) (6,914) - (6,914)
provisions
(-)
VII. FACTORING I-7 41,900 24,654 66,554 26,047 23,361 49,408
RECEIVABLES
VIII. SECURITIES 36,781 2,840 39,621 50,069 38,573 88,642
HELD TO
MATURITY
(Net)
8.1 Public sector I-8 36,781 2,840 39,621 50,062 38,573 88,635
debt
securities
8.1.1 Government I-8 36,557 2,840 39,397 50,062 - 50,062
bonds
8.1.2 Treasury I-8 224 - 224 - - -
bills
8.1.3 Other I-8 - - - - 38,573 38,573
8.2 Other I-8 - - - 7 - 7
marketable
securities
IX. INVESTMENTS 443 - 443 492 - 492
AND
ASSOCIATES
(Net)
9.1 Financial I-9 443 - 443 492 - 492
investments
and
associates
9.2 Non-Financial - - - - - - -
investments
and
associates
X. SUBSIDIARIES 338 - 338 347 466 813
(Net)
10.1 Financial I-10 338 - 338 347 466 813
subsidiaries
10.2 Non-Financial - - - - - - -
subsidiaries
XI. OTHER I-11 - - - - - -
INVESTMENTS
(Net)
XII. FINANCE LEASE 4,683 80,364 85,047 7,683 54,377 62,060
RECEIVABLES
(Net)
12.1 Gross finance I-12 6,559 90,374 96,933 9,194 63,266 72,460
lease
receivables
12.2 Unearned I-12 (1,876) (10,010) (11,886) (1,511) (8,889) (10,400)
income ( - )
XIII. RESERVE - 9,242 122,663 131,905 8,985 122,679 131,664
DEPOSITS
XIV. MISCELLANEOUS I-13 311 41 352 309 44 353
RECEIVABLES
XV. ACCRUED 24,073 12,050 36,123 28,106 28,444 56,550
INTEREST AND
INCOME
RECEIVABLES
15.1 Loans I-14 9,357 9,817 19,174 10,322 25,160 35,482
15.2 Marketable I-14 4,207 537 4,744 5,529 1,671 7,200
securities
15.3 Other I-14 10,509 1,696 12,205 12,255 1,613 13,868
XVI. PROPERTY AND 41,938 411 42,349 39,839 441 40,280
EQUIPMENT
(Net)
16.1 Book value I-15 95,547 1,121 96,668 84,239 962 85,201
16.2 Accumulated I-15 (53,609) (710) (54,319) (44,400) (521) (44,921)
depreciation
( - )
XVII. INTANGIBLE 3,765 125 3,890 3,303 297 3,600
ASSETS (Net)
17.1 Goodwill I-16 370 - 370 370 - 370
17.2 Other I-16 8,487 911 9,398 6,643 889 7,532
17.3 Accumulated (5,092) (786) (5,878) (3,710) (592) (4,302)
amortization
( - )
XVIII. OTHER ASSETS I-17 36,974 2,507 39,481 33,106 6,415 39,521
TOTAL ASSETS 895,723 2,808,833 3,704,556 630,981 2,447,208 3,078,189
The accompanying notes are an integral part of these balance sheets.
II- CONSOLIDATED BALANCE SHEET
Current Period Prior Period
31.12.2002 31.12.2001
LIABILITIES Note
Ref. TL FC Total TL FC Total
(Section
Five)
I. DEPOSITS 390,122 2,415,641 2,805,763 289,834 1,897,358 2,187,192
1.1 Bank II-1 30,329 75,112 105,441 21,444 68,954 90,398
deposits
1.2 Saving II-1 163,563 - 163,563 130,909 - 130,909
deposits
1.3 Public II-1 35 - 35 122 - 122
sector
deposits
1.4 Commercial II-1 162,985 - 162,985 136,310 - 136,310
deposits
1.5 Other II-1 33,210 - 33,210 1,049 - 1,049
institutions
deposits
1.6 Foreign II-1 - 2,318,074 2,318,074 - 1,814,138 1,814,138
currency
deposits
1.7 Precious II-1 - 22,455 22,455 - 14,266 14,266
metals
deposit
accounts
II. MONEY MARKET 22,800 - 22,800 - - -
BALANCES
2.1 Interbank - - - - - - -
money market
takings
2.2 Istanbul - - - - - - -
Stock
Exchange
money market
takings
2.3 Funds II-2 22,800 - 22,800 - - -
provided
under
repurchase
agreements
III. FUNDS 35,331 357,549 392,880 50,464 395,679 446,143
BORROWED
3.1 Funds - - - - - - -
borrowed
from the
Central Bank
of Turkey
3.2 Other funds II-3 35,331 357,549 392,880 50,464 395,679 446,143
borrowed
3.2.1 Domestic II-3 16,849 12,144 28,993 20,946 15,546 36,492
banks and
institutions
3.2.2 Foreign II-3 18,482 345,405 363,887 29,518 380,133 409,651
banks,
institutions
and funds
IV. MARKETABLE - - - - - -
SECURITIES
ISSUED (Net)
4.1 Bills II-4 - - - - - -
4.2 Asset backed II-4 - - - - - -
securities
4.3 Bonds II-4 - - - - - -
V. FUNDS II-5 - - - - - -
VI. MISCELLANEOUS II-6 22,196 37,618 59,814 21,472 44,549 66,021
PAYABLES
VII. OTHER II-7 18,646 6,605 25,251 21,565 13,248 34,813
EXTERNAL
RESOURCES
VIII. TAXES AND II-8 6,758 - 6,758 7,923 - 7,923
OTHER DUTIES
PAYABLE
IX. FACTORING II-9 13,104 14,878 27,982 - 11,899 11,899
PAYABLES
X. FINANCE - - - - - -
LEASE
PAYABLES
(Net)
10.1 Finance II-10 - - - - - -
Lease
Payables
10.2 Deferred II-10 - - - - - -
finance
lease
expenses (-)
XI. ACCRUED 13,063 11,837 24,900 12,436 25,603 38,039
INTEREST AND
EXPENSES
PAYABLE
11.1 Deposits II-11 5,300 8,829 14,129 6,256 19,383 25,639
11.2 Borrowings II-11 2,061 2,185 4,246 2,851 5,172 8,023
11.3 Repurchase II-11 28 - 28 - 1,048 1,048
agreements
11.4 Other II-11 5,674 823 6,497 3,329 - 3,329
XII. PROVISIONS 36,649 1,685 38,334 34,366 4,286 38,652
12.1 General II-12 6,093 - 6,093 4,828 - 4,828
provisions
12.2 Reserve for II-12 1,751 - 1,751 1,513 - 1,513
employee
termination
benefits
12.3 Provisions II-12 21,245 1,685 22,930 21,845 4,286 26,131
for income
taxes
12.4 Insurance - 7,017 - 7,017 6,101 - 6,101
technical
reserves
(Net)
12.5 Other II-12 543 - 543 79 - 79
provisions
XIII. SUBORDINATED II-12 - 24,596 24,596 - - -
LOANS
XIV. MINORITY II-20 19,246 - 19,246 18,167 - 18,167
INTEREST
XV. SHAREHOLDERS' 215,957 40,275 256,232 200,396 28,944 229,340
EQUITY
15.1 Paid-in II-13 55,125 - 55,125 55,125 - 55,125
capital
15.2 Supplementary II-13 182,146 - 182,146 406,123 - 406,123
capital
15.2.1 Share II-14 - - - - - -
premium
15.2.2 Share - - - - - - -
cancellation
profits
15.2.3 Marketable II-15 201 - 201 - - -
securities
value
increase
fund
15.2.4 Revaluation II-16 - - - - - -
fund
15.2.5 Value II-17 - - - - - -
increase in
revaluation
fund
15.2.6 Other - - - - 569 - 569
capital
reserves
15.2.7. Effect on - 181,945 - 181,945 405,554 - 405,554
inflation
accounting
on share
capital
15.3 Profit - 4,410 5,851 10,261 54,602 4,587 59,189
reserves
15.3.1 Legal II-18 4,410 - 4,410 54,602 - 54,602
reserves
15.3.2 Status - - - - - - -
reserves
15.3.3 Extraordinary - - - - - -
reserves
15.3.4 Other profit - - 5,851 5,851 - 4,587 4,587
reserves
15.4 Profit or - (25,724) 34,424 8,700 (315,454) 24,357 (291,097)
loss
15.4.1 Prior year - (40,346) 23,050 (17,296) (248,576) 16,863 (231,713)
income/loss
15.4.1.1 Group's - (30,086) 23,050 (7,036) (246,222) 16,863 (229,359)
share
15.4.1.2 Minority II-20 (10,260) - (10,260) (2,354) - (2,354)
shares
15.4.2 Current year - 14,622 11,374 25,996 (66,878) 7,494 (59,384)
income/loss
15.4.2.1 Group's - 13,604 11,374 24,978 (59,512) 7,494 (52,018)
share
15.4.2.2 Minority - 1,018 - 1,018 (7,366) - (7,366)
shares
TOTAL 793,872 2,910,684 3,704,556 656,623 2,421,566 3,078,189
LIABILITIES
The accompanying notes are an integral part of these balance sheets.
III- CONSOLIDATED STATEMENTS OF INCOME
Current Period Prior Period
31.12.2002 31.12.2001
INCOME AND EXPENSES Note Ref.
(Section Five) Total Total
I. INTEREST INCOME III-1 454,393 648,723
1.1 Interest on loans 205,985 245,208
1.1.1 Interest on TL loans 131,480 152,437
1.1.1.1 Short term loans 123,776 129,510
1.1.1.2 Medium and long term loans 7,704 22,927
1.1.2 Interest on foreign currency loans 73,864 92,666
1.1.2.1 Short term loans 58,391 81,589
1.1.2.2 Medium and long term loans 15,473 11,077
1.1.3 Interest on loans under follow-up 641 105
1.1.4 Premiums received from Resource Utilization Support - -
Fund
1.2 Interest received from reserve deposits 4,244 1,376
1.3 Interest received from banks 62,622 113,009
1.3.1 The Central Bank of Turkey 18 2,237
1.3.2 Domestic banks 16,034 57,279
1.3.3 Foreign banks 46,570 53,493
1.4 Interest received from money market transactions 86,031 127,363
1.5 Interest received from marketable securities 59,507 82,461
portfolio
1.5.1 Trading securities 26,430 79,215
1.5.2 Available-for-sale securities 770 2,636
1.5.3 Held to maturity securities 32,307 610
1.6 Other interest income 36,004 79,306
II. INTEREST EXPENSE III-2 260,997 473,155
2.1 Interest on deposits 188,380 329,843
2.1.1 Bank deposits 17,581 26,861
2.1.2 Saving deposits 70,977 83,095
2.1.3 Public sector deposits 4 -
2.1.4 Commercial deposits 10,804 71,894
2.1.5 Other institutions deposits 155 786
2.1.6 Foreign currency deposits 88,713 146,824
2.1.7 Precious metals vault accounts 146 383
2.2 Interest on money market transactions 33 1,730
2.3 Interest on funds borrowed 42,466 141,560
2.3.1 The Central Bank of Turkey - -
2.3.2 Domestic banks 8,581 18,048
2.3.3 Foreign banks 33,370 98,218
2.3.4 Other financial institutions 515 25,294
2.4 Interest on securities issued - -
2.5 Other interest expense 30,118 22
III. NET INTEREST INCOME (I - II) 193,396 175,568
IV. NET FEES AND COMMISSIONS INCOME 35,592 32,003
4.1 Fees and commissions received 49,879 50,253
4.1.1 Cash loans 2,604 4,633
4.1.2 Non-cash loans 7,146 7,788
4.1.3 Other 40,129 37,832
4.2 Fees and commissions paid 14,287 18,250
4.2.1 Cash loans 1,770 4,675
4.2.2 Non-cash loans 117 845
4.2.3 Other 12,400 12,730
V. DIVIDEND INCOME - -
5.1 Trading securities - -
5.2 Available-for-sale securities - -
VI. NET TRADING INCOME 17,135 2,597
6.1 Profit/losses on trading account securities (Net) 21,711 23,734
6.2 Foreign exchange gains/losses (Net) (4,576) (21,137)
VII PROFIT/LOSS FROM HELD TO MATURITY MARKETABLE III-3 - -
SECURITIES
VIII. OTHER OPERATING INCOME III-4 21,712 30,407
IX. TOTAL OPERATING INCOME (III+IV+V+VI+VII+VIII) 267,835 240,575
X. PROVISION FOR LOAN LOSSES OR OTHER RECEIVABLES (-) III-5 16,455 12,170
XI. OTHER OPERATING EXPENSES (-) III-6 143,880 157,509
XII. NET OPERATING INCOME (IX-X-XI) 107,500 70,896
XIII. PROFIT/LOSSES FROM ASSOCIATES AND SUBSIDIARIES III-7 - -
XIV. GAIN / (LOSS) ON NET MONETARY POSITION (51,541) (112,261)
XV. INCOME BEFORE TAXES (XII+XIII) 55,959 (41,365)
XVI. PROVISION FOR TAXES ON INCOME (-) (29,963) (18,019)
XVII. NET OPERATING INCOME/EXPENSE AFTER TAXES (XIV-XV) 25,996 (59,384)
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 (-) III-8 - -
XX. NET PROFIT/LOSSES (XVI+XVII+XVIII-XIX) 25,996 (59,384)
20.1 Group's profit/loss III-9 24,978 (52,018)
20.2 Minority shares 1,018 (7,366)
XXI. Earnings/Losses per share 235,79 (538,63)
The accompanying notes are an integral part of these statements.
IV- CONSOLIDATED STATEMENTS OF OFF-BALANCE SHEET COMMITMENTS
Current Period Prior Period
31.12.2002 31.12.2001
OFF- BALANCE Note
SHEET COMMITMENTS Ref. TL FC TOTAL TL FC TOTAL
(Section
Five)
A. OFF - BALANCE 528,700 1,497,860 2,026,560 416,727 1,024,297 1,441,024
SHEET COMMITMENTS
(I+II+III)
I. GUARANTEES IV-1 264,928 687,119 952,047 236,415 627,671 864,086
1.1. Letters of 264,814 315,819 580,633 236,415 365,377 601,792
guarantee
1.1.1. Guarantees 28,507 253 28,760 16,761 44,106 60,867
subject to State
Tender Law
1.1.2. Guarantees given 69,747 46,968 116,715 - 29,382 29,382
for foreign trade
operations
1.1.3. Other letters of 166,560 268,598 435,158 219,654 291,889 511,543
guarantee
1.2. Banks loans - 40,361 40,361 - 28,222 28,222
1.2.1. Import letter of - 40,361 40,361 - 27,211 27,211
acceptance
1.2.2. Other bank - - - - 1,011 1,011
acceptances
1.3. Letters of credit 72 321,915 321,987 - 219,376 219,376
1.3.1. Documentary 72 283,699 283,771 - 219,376 219,376
letters of credit
1.3.2. Other letters of - 38,216 38,216 - - -
credit
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
guarantees
1.7. Other guarantees 42 1,395 1,437 - 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 181,237 329,233 510,470 167,458 - 167,458
commitments
2.1.1. Asset purchase 1,000 - 1,000 - - -
commitments
2.1.2. Deposit purchase - 329,233 329,233 - - -
and sales
commitments
2.1.3. Share capital - - - - - -
commitment to
associates and
subsidiaries
2.1.4. Loan granting 112,902 - 112,902 103,487 - 103,487
commitments
2.1.5. Securities issue - - - - - -
brokerage
commitments
2.1.6. Commitments for - - - - - -
reserve deposit
requirements
2.1.7. Commitments for 67,335 - 67,335 63,971 - 63,971
credit card
limits
2.1.8. Other irrevocable - - - - - -
commitments
2.2. Revocable - - - - 151,422 151,422
commitments
2.2.1. Revocable loan - - - - - -
granting
commitments
2.2.2. Other revocable - - - - 151,422 151,422
commitments
III. DERIVATIVE IV-2 82,535 481,508 564,043 12,854 245,204 258,058
FINANCIAL
INSTRUMENTS
3.1. Forward foreign 82,535 176,476 259,011 12,854 216,095 228,949
currency buy/sell
transactions
3.1.1. Forward foreign 21,004 106,955 127,959 5,375 109,105 114,480
currency
transactions-buy
3.1.2. Forward foreign 61,531 69,521 131,052 7,479 106,990 114,469
currency
transactions-sell
3.2. Swap transactions - 305,032 305,032 - 29,109 29,109
related to f.c.
and interest
rates
3.2.1. Foreign currency - 151,844 151,844 - 14,467 14,467
swap-buy
3.2.2. Foreign currency - 153,188 153,188 - 14,642 14,642
swap-sell
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 1,160,196 384,239 1,544,435 985,573 200,101 1,185,674
PLEDGED ITEMS
(IV+V)
IV. ITEMS HELD IN 810,666 256,943 1,067,609 698,194 174,112 872,306
CUSTODY
4.1. Assets under - - - - - -
management
4.2. Investment 281,669 144,849 426,518 349,432 70,678 420,110
securities held
in custody
4.3. Checks received 515,188 44,196 559,384 342,246 24,186 366,432
for collection
4.4. Commercial notes 12,597 20,967 33,564 6,516 29,907 36,423
received for
collection
4.5. Other assets 435 46,931 47,366 - 49,341 49,341
received for
collection
4.6. Assets received - - - - - -
for public
offering
4.7. Other items under 777 - 777 - - -
custody
4.8. Custodians - - - - - -
V. PLEDGED ITEMS 349,530 127,296 476,826 287,379 25,989 313,368
5.1. Marketable 11,753 8,369 20,122 495 - 495
securities
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. Immovable 111,746 37,049 148,795 118,999 24,679 143,678
5.6. Other pledged 31,228 80,559 111,787 - 1 1
items
5.7. Pledged - - - - - -
items-depository
TOTAL COMMITMENTS 1,688,896 1,882,099 3,570,995 1,402,300 1,224,398 2,626,698
(A+B)
The accompanying notes are an integral part of these statements.
V- CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Note Ref.
(Section Effect on
Five) inflation
Paid-in Accounting Share Legal Status Extraordinary
Capital on premium Reserves Reserves Reserves
Capital
1 Balances at the V-13 55,125 405,554 - 50,940 - -
beginning of the
period -31.12.2000
2 Foreign exchange - - - - - -
difference
3 Net Income - - - - - -
4 Dividend - - - - -
5 Transferred to legal V-18 - - - 3,662 - -
reserves
6 Bond Convertible to - - - - -
shares
7 Issuance of share - - - - - -
certificate
Closing Balance of the 55,125 405,554 - 54,602 - -
period
(1+2+3+4+5+6+7+8+9+10)
1 Balances at the 55,125 405,554 - 54,602 - -
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 I-16 - - - - - -
investment
5.1 Transferred to net I-16 - - - - - -
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) - (50,192) - -
reserves
10 Issuance of share - - - - - -
certificate
Closing Balance 55,125 181,945 - 4,410 - -
(1+2+3+4+5+6+7+8+9+10)
(*) The negative goodwill was included in other reserves balance at the beginning of the year, amounting to TL569, is
reflected in the income statement for the current year.
Value Marketable
Current Increase Securities
Other Period Net Prior Period Fund Value
Note Ref Reserves Income/ Net Income/ Revaluation Revaluation Increase
(Section Five) (*) (Loss) (Loss) Fund Fund Fund Total
1 Balances at the V-13 2,135 30,089 (255,119) - - - 288,724
beginning of the
period -31.12.2000
2 Foreign exchange 3,021 - (3,021) - - - -
difference
3 Net Income - (59,384) - - - - (59,384)
4 Dividend - - - - - - -
5 Transferred to legal V-18 - (30,089) 26,427 - - - -
reserves
6 Bond Convertible to - - - - - - -
shares
7 Issuance of share - - - - - - -
certificate
Closing Balance of 5,156 (59,384) (231,713) - - - 229,340
the period
(1+2+3+4+5+6+7+8+9+10)
1 Balances at the 5,156 (59,384) (231,713) - - - 229,340
beginning of the
period -31.12.2001
Increases in the - - -
period :
2 Available for sale - - - - - - -
investment
2. Net fair value - - - - - - -
1 gain/losses
3 Cash flow hedge: - - - - - - -
3. Net fair value - - - - - - -
1 gain/losses
4 Foreign exchange 1,264 - - - - - 1,264
difference
Transferred Amount :
5 Available for sale I-16 (569) - - - - - (569)
investment
5. Transferred to net I-16 (569) - - - - - (569)
1 income
6 Cash flow hedge: V-15 - - - - - 201 201
6. Transferred to net - - - - - - -
1 income
6. Transferred to V-15 - - - - - 201 201
2 assets
7 Net Income - 25,966 - - - - 25,966
8 Dividend - - - - - - -
9 Transferred to legal V-18 - 59,384 214,417 - - - -
reserves
10 Issuance of share - - - - - - -
certificate
Closing Balance 5,851 25,996 (17,296) - - 201 256,232
(1+2+3+4+5+6+7+8+9+10)
(*) The negative goodwill was included in other reserves balance at the beginning of the year, amounting to TL569, is
reflected in the income statement for the current year.
The accompanying notes are an integral part of these statements.
VI- CONSOLIDATED STATEMENTS OF CASH FLOWS
Note Ref. Current Period Prior Period
(Section Five) 31.12.2002 31.12.2001
A. CASH FLOWS FROM BANKING OPERATIONS
1.1 Operating profit before changes in operating assets 49,469 (15,856)
and liabilities(+)
1.1.1 Interest received(+) 470,780 797,535
1.1.2 Interest paid(-) (275,761) (595,640)
1.1.3 Dividend received(+) - -
1.1.4 Fees and commissions received(+) 49,879 50,251
1.1.5 Other income(+) 43,423 54,141
1.1.6 Collections from previously written off loans and 1,004 2,008
other receivables(+)
1.1.7 Payments to personnel and service suppliers(-) (58,469) (61,703)
1.1.8 Taxes paid(-) (40,185) (32,631)
1.1.9 Other VI-1 (141,202) (229,817)
1.2 Changes in operating assets and liabilities 429,318 689,748
(37,829) 17,712
1.2.1 Net (increase) decrease in trading securities(+/-) (13,752) 87,579
1.2.2 Net (increase) decrease in due from banks and other (118,970) (55,822)
financial institutions(+/-)
1.2.3 Net (increase) decrease decrease in loans VI-1 (40,335) 68,655
1.2.4 Net (increase) decrease in other assets(+/-) 15,043 (21,991)
1.2.5 Net increase (decrease) in bank deposits(+/-) 603,528 572,880
1.2.6 Net increase (decrease) in other deposits(+/-) - -
1.2.7 Net increase (decrease) in funds borrowed(+/-) 16,083 8,879
1.2.8 Net increase (decrease) in matured payables(+/-) VI-1 5,550 11,856
1.2.9 Net increase (decrease) in other liabilities(+/-)
478,787 673,892
I. Net cash provided from banking operations(+/-)
B. CASH FLOWS FROM INVESTING ACTIVITIES
20,876 371,350
II. Net cash provided from investing activities(+/-)
VI-2 - -
2.1 Cash paid for purchase of investments, associates and VI-3 483 -
subsidiaries(-)
2.2 Cash obtained from sale of investments, associates and (17,119) (12,074)
subsidiaries(+)
2.3 Fixed assets purchases(-) 1,623 799
2.4 Fixed assets sales(+) (16,865) (3,733)
2.5 Cash paid for purchase of securities available for 3,733 -
sale (-)
2.6 Cash obtained from sale of securities available for (39,621) (88,642)
sale (+)
2.7 Cash paid for purchase of investment securities(-) 88,642 475,000
2.8 Cash obtained from sale of investment securities(+) - -
2.9 Extraordinary items(+/-) - -
2.10 Other (+/-)
C. CASH FLOWS FROM FINANCING ACTIVITIES
(28,666) (977,213)
III. Net cash provided from financing activities(+/-)
417,477 446,143
3.1 Cash obtained from funds borrowed and securities (446,143) (1,423,356)
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(-) - -
3.6 Extraordinary items(+/-) - -
3.7 Other(+/-)
IV. Effect of change in foreign exchange rate on cash and (1,034) (14,886)
cash equivalents
V. Net increase / (decrease) in cash and cash 469,963 53,143
equivalents(I+II+III)
VI. Cash and cash equivalents at beginning of the year(+) VI-4 1,394,335 1,341,192
VII. Cash and cash equivalents at end of the year VI-4 1,864,298 1,394,335
The accompanying notes are an integral part of these statements.
SECTION THREE
ACCOUNTING PRINCIPLES
I. Basis of Presentation
The Parent 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.
Changes in Accounting Policies and Valuation Methods in the Current Period
Changes in Accounting Policies
Until September 30, 2002, the Parent 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 "Accounting
Application Regulations" (AAR) 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.
Certain reclassifications were made on the December 31, 2001 financial
statements for comparative presentation with to the current period consolidated
financial statements.
II- Presentation of the Information Regarding the Parent Bank and the
Group Companies Included in the Consolidation:
Turk Ekonomi Bankasi Anonim Sirketi and its financial institutions, The Economy
Bank N.V. (Economy Bank), Petek International Holdings B.V. (Petek
International), TEB Yatirim Menkul Degerler A.S. (TEB Yatirim), TEB Portfoy
Yonetimi A.S. (TEB Portfoy), TEB Finansal Kiralama A.S. (TEB Leasing), TEB
Factoring A.S. (TEB Factoring) and TEB Sigorta A.S. (TEB Sigorta) are included
in the accompanying consolidated financial statements by full consolidation
method. The provisions of the Communique 15 "The Standard of Preparation of
Consolidated Financial Statements and Accounting for the Subsidiaries,
Participations and the Entities and Participations Jointly Controlled" of the
AAR were considered while determining the institutions to be consolidated. The
Parent Bank and the institutions included in the consolidation will be named as
"the Group".
Certain changes were made on the financial statements of the subsidiaries, which
were prepared in accordance with the principles and rules regarding financial
statement and report presentation stated in the Turkish Commercial Code and/or
Financial Leasing Law and/or XI/1 and XI/11 numbered communiqies of the Capital
Board Market and any other communiques which adds and changes statements at the
formal communiqies, in order to present their financial statements in accordance
with to AAR.
Explanations on Consolidation Method and Scope
The commercial names of the institutions included in consolidation and the
locations of the head offices of these institutions:
Commercial Name: Head Office
------------------- ---------------
Economy Bank The Netherlands
Petek International The Netherlands
TEB Yatirim Istanbul
TEB Portfoy Istanbul
TEB Leasing Istanbul
TEB Factoring Istanbul
TEB Sigorta Istanbul
Full consolidation method is used for all the financial institutions included in
the consolidation.
The unconsolidated subsidiary TEB Kiymetli Madenler Anonim Sirketi is valued at
cost. The financial statements of TEB Kiymetli Madenler Anonim Sirketi is not
included in the consolidation as of December 31, 2002 in accordance with the
AAR's materiality principle.
When there are differences between the accounting policies of the subsidiaries
and the Parent Bank, the financial statements are adjusted in accordance with
the ARR principles considering the materiality. The financial statements of the
subsidiaries are prepared as of December 31, 2002 and 2001 and restated in
accordance with the inflation accounting principles.
The transactions and balances between the Parent Bank and the subsidiaries are
netted off.
No subsidiaries were acquired during the current period. The Group does not have
any goodwill related to the subsidiaries. No difference occured while applying
the fair values at the foreign entities' assets and liabilities. There are no
subsidiaries disposed in at the current or previous periods.
Explanations on Foreign Currency Transactions
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 Parent Bank and the
resulting foreign exchange gains or losses are recorded in the statement of
income as foreign exchange gain or loss. The USD exchange rate used for
translating foreign currency transactions into Turkish Lira and reflecting these
to consolidated financial statements as of December 31, 2002 is TL 1,639,745
(2001 - TL 1,446,638 (in full TL)).
The Group's total net foreign exchange loss included in the net income of the
period is TL 4,576 (2001 - TL 21,137). The amount results from recording of the
foreign exchange gain amounting to TL 12,724 related to the foreign currency
indexed loans under the "Interest Income" in accordance with the Uniform Chart
of Accounts.
There are no capitalized foreign exchange losses.
The information regarding the principles of foreign currency risk management are
stated in Section Four, Note V.
The net investment in foreign entities of the Group as of the related year-ends
were translated into Turkish lira by applying the Parent Bank's exchange rates
prevailing at respective dates. The resulting foreign exchange gains or losses
are recorded in the statement of income.
There are no debt securities issued. Foreign exchange gains and losses arising
from translating monetary financial assets are reflected to foreign exchange
gains / (losses) in the statement of income.
III- Explanations on Forward, Option Contracts and Derivative Instruments
The Parent Company 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 foreign exchange rates of the Parent Bank 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.
IV- Netting of Financial Assets and Liabilities
Financial assets and liabilities are netted off when the Parent Bank has a legal
right and sanction regarding netting off, and when the Bank has the intention of
collecting or paying the net amount of related assets and liabilities or when
the Bank has the right to off set the assets and liabilities simultaneously.
There is no netting of financial assets and liabilities at the accompanying
financial statements as of December 31, 2002.
V- 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.
VI- 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.
VII- 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 in 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."
VIII- 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 Parent Bank does not have any reverse repo
transactions (2001 - None).
As of December 31, 2002, the Parent Bank does not have any lent marketable
securities (2001 - None).
IX- 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) are 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.
X- Unconsolidated Participations and Subsidiaries
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. The difference between the fair value and cost
value of the participations valued at fair value is recorded to " Marketable
Security Increase in Value Fund " under the Shareholders' Equity.
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.
There are no foreign currency unconsolidated participations or subsidiaries.
XI- 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 for group III, group IV, group V loans 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 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.
Foreign currency denominated loans are recoreded at the Turkish Lira equivalent
values at the recording dates and the foreign currency exchange gains generated
from these loans are recorded under the interest income accounts.
XII- Goodwill and Other Intangible Fixed Assets
The negative difference which totals to TL 569 ( 2001 - TL 569 ), between the
cost of TEB Leasing and the Parent Bank's share in its equity as of December 31,
2002, generating from the changes at the Parent Bank's participation structure
in the year 2000 is reflected in the current period's income statement. The
positive difference which totals to TL 370 ( 2001 - TL 370 ), between the cost
of TEB Factoring and the Parent Bank's share in its equity is reflected under
the intangible fixed assets as goodwill in the accompanying consolidated
financial statements after deducting the accumulated amortization amounting to
TL 222 ( 2001 - TL 148 ).
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 Parent 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. Soft wares
mainly used are developed within the Parent 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.
XIII- 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 prorata 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.
XIV- 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 Parent Bank records depreciation expense in
each period for the leased assets. The depreciation rate is determined in
accordance with the Communique No:2 "Accounting Standard of Tangible Fixed
Assets" and the depreciation rate is 20%.
The gross lease receivables including interest and principal amounts regarding
the Group's financial leasing activities conducted by TEB Leasing as "Lessor"
are stated under the receivables from the financial leasing activities. The
difference between the total of rent payments and the cost of the related fixed
assets are reflected to the" unearned income" account. The interest income is
calculated and recorded as prevailing a stable periodic income ratio over the
lessor's investment on the leased item.
The Group expenses the rent payments made regarding the rent agreements made
under operational activities throughout the rent period in equal amounts.
XV- 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 Group immediately at the estimated amounts. The Parent Bank did
not provide an additional provision for contingent liabilities as of December
31, 2002 apart from the doubtful receivable provision and general provision set
in accordance with the relased regulations.
XVI- Liabilities Regarding Employee Benefits
In accordance with the existing social legislation, the Group 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 Group 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
Group. In accordance with AAR, Communique No:10, the Group sets provision for
retirement and notice pay liabilities by taking the actual payment rates for the
previous 5 years into consideration. The Group has no employees contracted for
determined periods.
As of December 31, 2002 the arithmetical average of the actual payments realized
for the previous five years is 8.44%. The Bank's consolidated participations and
subsidiaries provided full reserve for retirement pay for the eligible personnel
as of December 31, 2002.
The Bank employees are members of TEB'LILER Foundation. The Bank does not have
any liability to this foundation.
There are no liabilities that require additional provisions related to other
employee rights.
XVII- 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 accordance with the Tax Procedural Code, the losses presented in the tax
declarations can be deducted from the tax assessments at the current period
within five yeras.
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 Group 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.
XVIII- Additional Explanations on Borrowings
The Group has not issued any debt securities.
The Group has not issued convertible bonds during the current period or the
previous period.
XIX- Paid-in Capital and Share Certificates
The Parent Bank does not have any costs regarding share issuance. Subsequent to
the balance sheet date, in the General Assembly meeting of the Parent Bank,
dated March 27, 2002, it was decided that the profit for the year 2002,
amounting TL 18,514 (in equivalent purchasing power as of December 31, 2002 ) to
be distributed to the shareholders after providing the legal reserves.
XX- Acceptances
Acceptances are realized simultaneously with the payment dates of the clients
and they are presented as likely commitments of the Group in off-balance sheet
accounts.
There are no acceptances of the Group presented as liabilities against any
assets.
XXI- Government Incentives
There are no government incentives utilized by the Group.
XXII- Securities at Custody
Securities at custody held by the Parent Bank on behalf of clients are not
reflected to the financial statements since they are not the Bank's assets.
XXIII- 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.
XXIV- Segment Reporting
Segment reporting will be made effective January 1, 2004.
XXV- Other Matters
Explanation for convenience translation to English:
The accounting principles used in the preparation of the accompanying
consolidated financial statements differ from International Financial Reporting
Standards (IFRS) and so far as such differences apply to the consolidated
financial statements of the Bank they relate mainly, but not limited, to the
format of consolidated 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 consolidated financial statements are not intended to present the
consolidated financial position and results of its consolidated operations in
accordance with accounting principles generally accepted in the countries of
users of the financial statements and IFRS.
There are no other issues required need to be disclosed.
SECTION FOUR
INFORMATION ON FINANCIAL STRUCTURE
I- Strategy for the Use of Financial Instruments and Explanation
Regarding the Foreign Currency Transactions
The Group 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 Group'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 Group aims to generate a
positive margin between the financing cost and product income and to prevent
maturity mismatch.
As a part of the Parent 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 kept
minimal at the Bank's treasury transactions. The Parent 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 Parent 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 Parent 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 Parent 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 Parent Bank's general strategy to
hedge foreign currency positions within legal limitations.
II- Consolidaded 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. The consolidated capital adequacy ratio of the
Parent Company Bank, calculated in accordance with the Communique on
"Measurement and Assessment of Banks Capital Adequacies " is 16.75% ( 2001 -
16.22% ).
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 Bank" 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 Groups", 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:
Consolidated Parent Bank
Risk Weight Risk Weight
0% 20% 50% 100% 0% 20% 50% 100%
Risk Weighted
Assets,
Liabilities,
Non-Cash Loans
Balance Sheet 1,327,967 1,034,980 93,755 1,092,307 1,024,774 326,762 8,708 787,494
items (Net)
Cash 86,776 - - - 86,683 - - -
Due from Groups 342,797 1,034,748 698 342,797 326,530 - 698
InterGroup 405,982 - - - 405,982 - - -
money market
placements
Receivables 7,051 - - - - - - -
from reverse
repo
transactions
Reserve 131,905 - - - 131,905 - - -
deposits
Special finance - - - - - - - -
houses
Loans 341,733 - 8,708 1,024,625 47,365 - 8,708 740,837
Loans under - - - 4,962 - - - 4,962
follow-up (Net)
Subsidiaries, - - - - - - - -
associates and
investments
held
to maturity
Miscellaneous - - - 352 - - - 299
receivables
Marketable - - - - - - - -
securities held
to maturity
(Net)
Advances for - - - - - - - -
assets acquired
by financial
Leasing
Financial lease - - 85,047 - - - - -
receivables
Leased assets - - - - - - - -
(Net)
Fixed assets - - - 38,322 - - - 33,817
(Net)
Other assets 11,723 232 - 23,348 10,042 232 - 6,881
Off balance 62,602 398,318 240,647 40,695 44,763 332,122 240,647 39,110
sheet items
Guarantees and 52,837 393,873 59,410 24,713 42,489 327,696 59,410 23,995
pledges
Commitments - - 181,237 - - - 181,237 -
Other off - - - - - - - -
balance sheet
items
Transactions - - - 2,871 - - - 3,160
related with
derivative
financial
Instruments
Interest and 9,765 4,445 - 13,111 2,274 4,426 - 11,955
income accruals
Non risk - - - - - - - -
weighted
accounts
Total Assets 1,390,569 1,433,298 334,402 1,133,002 1,069,537 658,884 249,355 826,604
Subject to Risk
Total Risk 286,660 167,201 1,133,002 - 131,777 124,678 826,604
Weighted Assets
Summary information related to the capital adequacy ratio:
Consolidated Parent Bank
Current Prior Current Prior
Period Period Period Period
Total Risk Weighted Assets (*) 1,637,112 1,345,399 1,102,734 1,044,259
Shareholders' Equity 274,268 218,279 169,817 138,426
Shareholders' Equity / Total risk weighted assets (CAR 16.75 16.22 15.40 13.26
(%))
(*) The above mentioned amounts consist of base amounts of the market risk
which are TL 50,249 and TL 19,675 as consolidated and as for the Parent
Bank basis, respectively, for the current period and TL 81,923 and
TL 77,828 TL for the previous period.
Information related to the shareholders' equity components :
Consolidated Parent Bank
Current Period Prior Period Current Period Prior Period
MAIN CAPITAL
Paid-in Capital 55,125 55,125 55,125 55,125
Nominal capital 55,125 55,125 55,125 55,125
Capital commitments (-) - - - -
Effect on Inflation Accounting on Share Capital 181,945 405,554 181,945 405,554
Share Premium - - - -
Legal Reserves 10,261 59,189 - 50,502
First legal reserve (Turkish Commercial Code 4,410 54,602 - 49,383
466/1)
Second legal reserve (Turkish Commercial Code - - - -
466/2)
Other legal reserve per special legislation 5,851 4,587 - 1,119
Statute Reserves - - - -
Extraordinary reserves - - - -
Reserves allocated by the General Assembly - - - -
Retained earnings - - - -
Accumulated loss - - - -
Foreign currency share capital exchange - - - -
difference
Profit 25,996 - 18,514 -
Current period profit 25,996 - 18,514 -
Prior period profit - - - -
Loss (-) (17,296) (291,097) - (274,111)
Current period loss - (59,384) - (17,380)
Prior period loss (17,296) (231,713) - (256,731)
Total Main Capital 256,031 228,771 255,584 237,070
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 6,093 4,828
Provisions for Possible Losses - - - -
Subordinated Loans 24,596 24,596 -
Marketable Securities and Investment Securities 201 272 201 -
Value Increase Fund
Associates and subsidiaries 201 272 201 -
Available for sale securities - - - -
Structured positions - - - -
Total Supplementary Capital 30,890 5,100 30,890 4,828
TIER III CAPITAL - - -
CAPITAL 286,921 233,871 286,474 241,898
DEDUCTIONS FROM THE CAPITAL 12,653 15,592 116,657 103,472
Investments in unconsolidated financial 781 1,315 106,815 94,715
companies whose main activities are money and
capital markets, insurance and that operate
with licenses provided in accordance with
special laws
Leasehold improvements 7,547 11,812 6,381 7,090
Start-up costs - - - -
Prepaid expenses 4,177 2,266 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 Groups which - - - -
operate in Turkey
Goodwill (Net) 148 199 - -
Capitalized expenses - - - -
Total Shareholder's Equity 274,268 218,279 169,817 138,426
III- Consolidated Credit Risk
Credit risk represents the risk generating from the Bank's 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 Groups is determined by their ratings and the control of the
accept risk level according to the Group'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 Group 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 Parent 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 Parent 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 Parent
Bank is considered.
The Parent 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 Grouping market.
The total loan balance of the top 100 cash loan clients of the Group is TL
682,344 (2001- TL 411,252) and the percentage to the total loan portfolio is
52.14% (2001- 31.43%).
As of December 31, 2002, the total balance of the top 100 non-cash loan clients
of the Group is TL 461,244 (2001- TL 488,773) and the percentage to the total
non-cash loan portfolio is 49.22% (2001- 52.16 %).
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 26.69% (2001- 30.31%).
As of December 31,2002, general provision for loans set by the Parent Bank
amounted to TL 6,093 (2001 - TL 4,828).
Information according to geographical concentration:
Assets Liabilities Non-Cash Loans Capital Investments Net Profit/Loss
Domestic
European Union Countries 2,785,635 1,867,369 823,709 781 14,622
OECD Countries * 308,190 1,363,724 127,182 - 11,374
Off-shore Banking Regions 75,974 14,294 - - -
USA, Canada 94,134 39,403 - - -
Other Countries 380,188 114,332 - - -
Unallocated 59,654 29,956 1,156 - -
Assets/liabilities**
Domestic - - - - -
Total 3,703,775 3,429,078 952,047 781 25,996
Prior Period
Domestic 2,523,893 1,530,878 779,727 839 (66,878)
European Union Countries 344,246 1,076,778 66,916 466 7,494
OECD Countries * 3,066 26,626 328 - -
Off-shore Grouping Regions 1,265 30,195 - - -
USA, Canada 201,823 166,205 17,115 - -
Other Countries 2,591 - - - -
Unallocated - - - - -
Assets/liabilities**
Total 3,076,884 2,830,682 864,086 1,305 (59,384)
* 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 2.00 67,062 7.04 6,880 2.68 93,485 10.14
Farming and raising 2,586 0.73 4,174 0.44 5,020 1.96 15,733 1.71
livestock
Forestry 4,462 1.26 62,888 6.60 1,841 0.72 77,752 8.43
Fishing 47 0.01 - 0.00 19 0.01 - 0.00
Manufacturing 189,051 53.18 393,850 41.33 163,822 63.86 384,302 41.66
Mining 19,768 5.56 149,052 15.64 506 0.20 25,671 2.78
Production 169,008 47.55 236,305 24.79 150,105 58.51 227,005 24.61
Electric, gas and water 275 0.08 8,493 0.89 13,211 5.15 131,626 14.27
Construction 9,135 2.57 16,527 1.73 2,859 1.11 19,590 2.12
Services 115,687 32.55 415,895 43.64 58,996 23.00 340,912 36.97
Wholesale and retail 39,572 11.13 151,004 15.84 13,635 5.32 78,092 8.47
trade
Hotel, food and 1,494 0.42 994 0.10 844 0.33 4,927 0.53
beverage services
Transportation and 9,444 2.66 37,190 3.90 4,187 1.63 27,807 3.02
telecommunication
Financial institutions 57,577 16.20 225,368 23.65 15,002 5.85 215,393 23.36
Real estate and renting 69 0.02 - 0.00 1,552 0.60 204 0.02
services
Self-employment 3,365 0.95 517 0.05 - 0.00 14,015 1.52
services
Education services 622 0.17 - 0.00 232 0.09 - 0.00
Health and social 3,544 1.00 822 0.09 23,544 9.18 474 0.05
services
Other 34,494 9.70 59,716 6.27 23,980 9.35 83,952 9.10
Total 355,462 100.00 953,050 100.00 256,537 100.00 922,241 100.00
IV- Consolidated Market Risk
The Group 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 Groups" announced in the Official Gazette dated
February 8, 2001.
The interest rate and exchange rate risks of the financial positions taken by
the Group 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 Parent 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.
Consolidated Parent Bank
Capital to be employed for interest rate risk - standard method 1,460 1,286
Capital to be employed for general market risk 1,460 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 2,560 288
Capital liability 2,560 288
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 4,020 1,574
Amount subject to market risk 50,249 19,675
V- Consolidated 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 Parent 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 Groups".
As an element of the Group's risk management strategies, foreign currency
liabilities are hedged against exchange rate risk by derivative instruments.
The Board of Directors of the Parent 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 Group's net long position is TL 57,698 (2001- TL
4,454) resulting from long position amounting to TL 36,090 (2001- TL 1,942) on
the balance sheet and long position amounting to TL 21,608 (2001- TL 6,396) from
off-balance sheet position.
The announced current foreign exchange buying rates of the Parent 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 1,176,781 1,169,633 1,180,579
GBP 2,657,574 2,631,386 2,608,675 2,643,345 2,618,888 2,640,240
JPY 13,866 13,682 13,580 13,741 13,678 13,792
EUR 1,717,823 1,701,512 1,691,403 1,714,448 1,703,477 1,718,945
The simple arithmetical average of the major current foreign exchange buying
rates of the Group for the thirty days before the balance sheet date is as
follows:
Monthly Average
FX rates
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 Group:
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 29,327 374,450 65 4,789 408,631
Central Bank of Turkey
Due from other Banks and financial institutions 125,853 808,102 1,834 60,587 996,376
Trading securities (**) 5,037 2,668 - 2,046 9,751
Investment securities available-for-sale - - 16,856 - 16,856
Loans (**) 224,820 785,414 - 23,222 1,033,456
Investments in subsidiaries and participations - - - - -
Investment securities held-to-maturity - 1,542 - 1,298 2,840
Property and equipment 411 - - - 411
Goodwill - - - - -
Other assets 82,706 328,397 363 9,670 421,136
Total Assets 468,154 2,300,573 19,118 101,612 2,889,457
Liabilities
Bank deposits 4,433 46,321 3 24,355 75,112
Foreign currency deposits (*) 267,531 2,020,275 804 51,919 2,340,529
Funds provided from other financial institutions 13,859 354,403 - 13,883 382,145
Marketable securities issued - - - - -
Miscellaneous payables 34,058 2,138 - 1,422 37,618
Other liabilities 93,125 9,443 - 9,183 111,751
Total liabilities 413,006 2,432,580 807 100,762 2,947,155
Net Balance Sheet Position 55,148 (132,007) 18,311 850 (57,698)
Net Off-Balance Sheet Position (103,839) 169,107 (18,082) (11,096) 36,090
Financial derivative assets 48,721 210,078 - - 258,799
Financial derivative liabilities 152,560 40,971 18,082 11,096 222,709
Non-cash loans (***) 177,079 480,386 4,240 25,414 687,119
Prior Period
Total Assets 397,746 1,984,968 382 74,420 2,457,516
Total Liabilities 323,832 2,052,379 363 76,488 2,453,062
Net Balance Sheet Position 73,914 (67,411) 19 (2,068) 4,454
Net Off-Balance Sheet Position (8,990) 10,805 72 55 1,942
Non-cash loans (***) 145,943 457,614 2,824 21,290 627,671
(*) 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.
(***)The amount does not have any impact on the net off-balance sheet
position.
This information is provided by RNS
The company news service from the London Stock Exchange
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