176 İşbank
Annual Report 2015
Türkiye İş Bankası A.Ş.
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2015
SECTION THREE: EXPLANATIONS ON ACCOUNTING POLICIES
I. Basis of Presentation
1. Basis of Presentation
The consolidated financial statements, related notes and explanations in this report are prepared in accordance with the “Banking Regulation and Supervision Agency (“BRSA”)
Accounting and Reporting Legislation” which includes the “Regulation on Accounting Applications for Banks and Safeguarding of Documents” published in the Official Gazette
No.26333 dated 1 November 2006, and other regulations on accounting records of Banks published by Banking Regulation and Supervision Board and circulars and interpretations
published by BRSA and requirements of Turkish Accounting Standards for the matters not regulated by the aforementioned legislations.
As indicated in Note XIII and Note XIV of Section Three, changes in the current period on accounting policies from historical cost method to revaluation / fair value method for the real
estates which held for the Group’s own use and investment properties. Accounting policy is applied retrospectively due to the changes in measurement of investment properties and
the financial statements of prior period are restated in accordance with the Turkish Accounting Standard (TAS) – 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.
The effects of aforementioned adjustments on financial statements dated 31 December 2014 and 31 December 2013 are summarized below.
31 December 2014
Reported
Adjustments
Restated
Assets
Tangible assets
(1)
2,386,849
(3,161)
2,383,688
Investment Properties
1,387,651
1,310,661
2,698,312
Deferred Tax Asset
637,937
(10,701)
627,236
Liabilities
Deferred Tax Liabilities
1,882
4,694
6,576
Prior Years' Profit/Loss
(648,918)
540,777
(108,141)
Net Period Profit/Loss
3,351,828
171,891
3,523,719
Non-controlling Interest
3,506,147
579,437
4,085,584
Income Statement
Other Operating Income
4,836,167
273,813
5,109,980
Other Operating Expense
9,515,404
(16,026)
9,499,378
Deferred Tax Income
287,857
(1,458)
286,399
Net Period Profit/Loss
3,732,036
288,381
4,020,417
Group’s Profit / Loss
3,351,828
171,891
3,523,719
Non-controlling Interest’s Profit/Loss
380,208
116,490
496,698
Profit per share
(2)
0.029793431
0.001527889
0.031321320
(1)
The effect of the reclassification of costs related to real estates which are held for Group’s own use and classified as tangible assets on consolidated financial statements from investment properties in the financial
statements.
(2)
Represented in full TL
31 December 2013
Reported
Adjustments
Restated
Assets
Tangible assets
(1)
2,234,328
(3,161)
2,231,167
Investment Properties
1,342,182
1,020,822
2,363,004
Deferred Tax Asset
666,543
(10,735)
655,808
Liabilities
Deferred Tax Liabilities
2,599
3,202
5,801
Prior Years' Profit/Loss
2,621,162
540,777
3,161,939
Non-controlling Interest
3,133,450
462,947
3,596,397
(1)
The effect of the reclassification of costs related to real estates which are held for Group’s own use and classified as tangible assets on consolidated financial statements from
investment properties in the financial statements.
The accounting policies are consistent with the financial statements in prior period, except the changes in the current period on accounting policies for real estates. Accounting
policies applied and valuation methods used in the preparation of the consolidated financial statements are expressed in detail below.
2. Additional paragraph for convenience translation to English
The differences between accounting principles, as described in the preceding paragraphs, and the accounting principles generally accepted in countries, in which the accompanying
consolidated financial statements are to be distributed, and International Financial Reporting Standards (“IFRS”), may have significant influence on the accompanying consolidated
financial statements. Accordingly, the accompanying consolidated financial statements are not intended to present the financial position and results of operations in accordance with
the accounting principles generally accepted in such countries and IFRS.
II. Strategy for Use of Financial Instruments and on Foreign Currency Transactions
1. The Group’s Strategy on Financial Instruments
The Group’s main financial activities comprise a wide range of activities such as banking, insurance and reinsurance services, brokerage services, investment consulting, real estate
portfolio and asset management, financial lease, factoring services, portfolio and asset management. The liabilities on the Group’s balance sheet are mainly composed of relatively
short-term deposits, parallel to general liability structure of the banking system, which is its main field of other activity. As for the non-deposit liabilities, funds are collected through
medium and short-term instruments. The liquidity risk that may arise from this liability structure can be easily controlled through deposit continuity, as well as widespread network of
the correspondent banks, market maker status (The Parent Bank is one of the market maker banks) and by the use of liquidity facilities of the Central Bank of the Republic of Turkey
(CBRT). The liquidity of the Group and the banking system can be easily monitored. On the other hand, foreign currency liquidity requirements are met by the money market operations
and currency swaps.
Most of the funds collected bear fixed-interest, and by monitoring the developments in the sector fixed and floating rate placements are made according to the yields of alternative
investment instruments.
The fixed rate Eurobond issued and a portion of fixed rate funds borrowed are subject to fair value hedge accounting. The Group enter into interest rate swap agreements in order
to hedge the change in fair values of its fixed rate financial liabilities. The changes in the fair value of the hedged fixed rate financial liabilities and hedging interest rate swaps are
recognized under the statement of profit/loss. At the beginning and later period of the hedging transaction, the aforementioned hedging transactions are expected to offset changes
occurred in the relevant period of the hedging transaction and hedged risk (attributable to hedging risk) and effectiveness tests are performed in this regard.
