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İş Bankası
Annual Report 2013
Financial Information and Risk Management
TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Unconsolidated Financial Statements
for the Year Ended 31 December 2013
SECTION THREE: EXPLANATIONS ON ACCOUNTING POLICIES
1. Basis of Presentation
The unconsolidated financial statements, related notes and explanations in this report are prepared in accordance with the Turkish
Accounting Standards (“TAS”) and Turkish Financial Reporting Standards (“TFRS”) (Together TMS); and “Regulation on Accounting
Applications for Banks and Safeguarding of Documents and other communiqués and interpretations of Banking Regulation and
Supervision Agency (“BRSA”) on accounting and financial reporting. Accounting policies applied and valuation methods used in the
preparation of the 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 interim financial statements are to be distributed, and International Financial
Reporting Standards (“IFRS”), may have significant influence on the accompanying interim financial statements. Accordingly, the
accompanying interim 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 Foreign Currency Transactions
1. The Bank’s Strategy on Financial Instruments
The Bank’s main activities comprise private, retail, commercial and corporate banking, money market and securities market
operations, as well as activities related to international banking services.
In conformity with the general liability structure of the banking system, the Bank’s liabilities are mainly composed of short-term
deposits and other medium and long-term liabilities. 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 Bank is
one of the market maker banks) and by the use of liquidity facilities of the Central Bank of Turkey (“CBT”). As a result, the liquidity of
the Bank 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 sectoral developments and the yields of alternative
investment instruments, fixed and floating rate placements are made.
Safety principle has always been the top priority in placements and the placements are focused on high yielding and low risk
assets by considering their maturity structure. Accordingly, a pricing policy aiming at high return is implemented in the long-term
placements and attention is paid to the maximum use of non-interest income generation opportunities. The Bank determines its
lending strategy by taking into consideration the international and national economic data and expectations, market conditions,
current and potential credit customers’ expectations and tendencies, and risks such as; interest rate, liquidity, currency and credit
risks. Furthermore, in conformity with this strategy, the Bank acts within the legal limits in terms of asset-liability management.
Main growth targets for different asset classes are set by the long-term plans shaped along with budgeting; and the Bank takes
the required positions against the short-term currency, interest rates and price fluctuations in accordance with these plans and the
course of the market conditions.
Foreign currency, interest rate and price fluctuations in the markets are monitored instantaneously. While taking positions, in
addition to the legal limits, the Bank’s own transaction and control limits are also effectively monitored in order to avoid limit
overrides.
The Bank’s asset-liability management is executed by the Asset-Liability Management Committee, within the risk limits determined
by the Board of Directors, in order to keep the liquidity risk, interest rate risk, currency risk and credit risk within certain limits
depending on the equity adequacy and to maximize profitability.
