180 İşbank
Annual Report 2015
Türkiye İş Bankası A.Ş.
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2015
Loans are classified and followed in line with the provisions of the “Regulation on Procedures And Principles For Determination of Qualifications of Loans And Other Receivables
By Banks And Provisions To Be Set Aside”, published on the Official Gazette numbered 26333 dated 1 November 2006. Within the scope of the relevant legislation the Parent Bank
was allocating specific provision for the non-performing loans and other receivables, the Parent Bank calculated to allocate specific provisions in accordance with the minimum
provision rates mentioned. Among the activities of the Group, for the receivables from the financial leasing and factoring companies provisions are set aside in accordance with the
communiques “Financial Leasing, Factoring and Financing Companies and Financial Statements of the Regulation on Accounting Policy” published on the Official Gazette numbered
28861 dated 24 December 2013 and “Communiqué on Principles and Procedures for Financial Leasing, Factoring and Financing Companies’ Provisions To Be Set Aside” under
the special provision is made and published on the Official Gazette numbered 26558 dated 20 July 2007 and for receivables acquired through the asset management activities in
“Regulation on the Establishment and Operations of Asset Management Companies” published on the Official Gazette numbered 26333 dated 1 November 2006 under the special
provision are made. Specific provisions are reflected in the income statement. Provisions released in the same year, “Provision Expense” account are credited in the past years, the
remaining part of the provisions in the “Other Operating Income” account transferred to and recognized.
Other than specific allowances, the Parent Bank and the financial institutions affiliated to the Group also provide “general allowances” for loan and other receivables classified in
accordance with the abovementioned legal regulations and communiqués.
IX. Offsetting Financial Instruments
A financial asset and a financial liability shall be offset and the net amount shall be presented in the balance sheet only when a party currently has a legally enforceable right to set off
the recognized amounts or intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
X. Sale and Repurchase Agreements and Securities Lending Transactions
Marketable securities subject to repurchase agreements are classified under “Available for Sale Financial Assets” or “Held to Maturity Investments” in the Parent Bank’s portfolio and
they are valued according to the valuation principles of the related portfolios.
Funds obtained from the repurchase agreements are recognized under “Funds from Repurchase Transactions” account in liabilities. For the difference between the sale and
repurchase prices determined by the repo agreements for the period; expense accrual is calculated using the internal rate of return method.
Reverse repo transactions are recognized under the “Receivables from Reverse Repurchase Transactions” account. For the difference between the purchase and resale prices
determined by the reverse Repurchase agreements for the period; income accrual is calculated using the internal rate of return method.
XI. Non-current Assets Held for Sale and Discontinued Operations and Related Liabilities
Assets that meet the criteria to be classified as held for sale are measured at the lower of its carrying amount and fair value less costs to sell and presented in the financial statements
separately. In order to classify a tangible fixed asset as held for sale, the asset (or the disposal group) should be available for an immediate sale in its present condition subject to the
terms of any regular sales of such assets (or such disposal groups) and the sale should be highly probable. For a highly probable sale, the appropriate level of management must be
committed to a plan to sell the asset (or the disposal group), and an active programme to complete the plan should be initiated to locate a customer. Also, the asset (or the disposal
group) should have an active market sale value, which is a reasonable value in relation to its current fair value. Events or circumstances may extend the completion of the sale more
than one year. Such assets are still classified as held for sale if there is sufficient evidence that the delay in the sale process is due to the events and circumstances occurred beyond
the control of the entity or the entity remains committed to its plan to sell the asset (or disposal group).
A discontinued operation is a component of a bank that either has been disposed of, or is classified as held for sale. Gains or losses relating to discontinued operations are presented
separately in the income statement. There are no discontinued operation on Parent Bank and consolidated associates.
XII. Goodwill and Other Intangible Assets
The Group’s intangible assets consist of consolidation goodwill and software programs.
Goodwill arising from the acquisition of a subsidiary represents the excess of cost of acquisition over the fair value of Group’s share of the identifiable assets, liabilities, or contingent
liabilities of the acquired subsidiary at the date of acquisition of the control. Goodwill is recognized as an asset at cost and then carried at cost less accumulated impairment losses.
In impairment-loss test, goodwill is allocated between the Group’s every cash-generating unit that is expected to benefit from the synergies of the business combination. To
control whether there is an impairment loss in the cash-generating units that goodwill is allocated, impairment- loss test is applied every year or more often if there is indications
of impairment loss. In the cases, recoverable amount of cash-generating unit is smaller than its book value; impairment loss is firstly used in reduction of book value of the cash-
generating unit, and then the other assets proportionally. Goodwill which is allocated for the impairment losses could not be reversed. When a subsidiary is to be sold, related
goodwill amount is combined with the profit/loss relating to this disposal. Positive goodwill arising from the Group’s investments in its subsidiaries is recognized in Intangible Assets.
Explanations on consolidation goodwill are given in Section Three, Note III.1.a.
As for other intangible assets, the purchased items are presented with their acquisition costs less the accumulated amortization and impairment provisions. In case there is an
indication of impairment, the recoverable amount of the related intangible asset is estimated within the framework of TAS 36 “Impairment of Assets” and impairment provision is set
aside in case the recoverable amount is below its acquisition cost.
Such assets are amortized by the straight-line method considering their estimated useful life. The amortization method and period are periodically reviewed at the end of each year.
XIII. Tangible Assets
Tangible assets purchased before 1 January 2005, are presented in the financial statements at their inflation adjusted acquisition costs as at 31 December 2004, and the items
purchased in the subsequent periods are presented at acquisition costs less accumulated amortization and impairment provisions. Beginning from the third quarter of the current
year, the Bank, has changed its accounting policies from historical cost method to revaluation method for the real estate properties which are held for own use in accordance with “TAS
16 - Property, Plant and Equipment”. The positive valuation differences between the net book value of real estate property values and the expertise values which are determined by
the licensed expertize companies are recognized under the equity.
In case there is an indication of impairment, the recoverable amount of the related intangible asset is estimated within the framework of “TAS 36 – Impairment of Assets” and
impairment provision is set aside in case the recoverable amount is below its acquisition cost.
Assets under construction for leasing or for administrative purposes or for other objectives, which are not presently determined, are amortized when they are ready for use.
The acquisition costs of tangible assets are amortized by the straight-line method, according to their estimated useful lives. The estimated useful life, residual amount and the
method of amortization are reviewed every year for the possible effects of the changes that occur in the estimates and if there is any change in the estimates, they are recognized
prospectively.
Assets held under finance leases are depreciated over the expected useful life or lease termwhichever is the shorter for the specified period.
Leasehold improvements are amortized in equal amounts considering their useful life. However, in any case the useful life cannot exceed the leasing term. When the lease period is
not certain or longer than 5 years, the amortization period is recognized as 5 years.
The difference between the sales proceeds arising from the disposal of tangible assets or the inactivation of a tangible asset and the book value of the tangible asset are recognized
in the income statement.
