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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
VI. Fees and Commission Income and Expenses
Fees and commission income and expenses are recorded either on accrual basis or by using the effective interest rate method.
Income earned in return for services rendered contractually or due to operations like sale or purchase of assets on behalf of a third
party real person or corporate body are recognized in income accounts in the period of collection.
VII. Financial Assets
Financial assets are comprised of cash, contractual rights to obtain cash or another financial asset from or to exchange financial
instruments with the counterparty, or the capital instrument transactions of the counterparty. According to the Bank management’s
purpose of holding, the financial assets are classified into four groups as “Financial Assets at Fair Value through Profit And Loss”,
“Financial Assets Available for Sale”, “Held to Maturity Investments” and “Loans and Receivables”.
1. Cash and Banks
Cash consists of cash in vault, foreign currency cash, money in transit, cheques purchased and precious metals. Foreign currency
cash and banks are shown in the balance sheet by their amounts converted into TL at the foreign exchange rate on the balance
sheet date. The carrying values of both the cash and banks are their estimated fair values.
2. Marketable Securities
a.
Financial Assets at Fair Value through Profit And Loss
a.1. Financial Assets Held for Trading
Financial assets held for trading are those acquired for the purpose of generating profit from short termmarket fluctuations in
prices or similar elements, or securities which are part of a portfolio set up to realize short term profit regardless of the purpose of
acquisition.
Financial Assets Held For Trading is presented in the balance sheet with their fair values and are subject to valuation at fair values
after the initial recognition. In cases where values that form the basis for the fair value do not exist in active market conditions, it is
accepted that the fair value is not reliably determined and “amortized cost”, calculated by the internal rate of return method, is taken
into account as the fair value.
Any gains or losses resulting from such valuation are recorded in the profit and loss accounts. As per the explanations of the Uniform
Code of Accounts (UCA), any positive difference between the historical cost and amortized cost of financial assets are recognized
under the “Interest Income” account, and in case the fair value of the asset is over the amortized cost, the positive difference is
recognized in the “Gains on Securities Trading” account. If the fair value is less than the amortized cost, the negative difference is
recognized under the “Losses on Securities Trading” account. Any profit or loss resulting from the disposal of those assets before
their maturity date is recognized within the framework of the same principles.
a.2. Financial Assets at Fair Value through Profit and Loss
Financial assets at fair value through profit and loss represent the financial assets at fair value through profit and loss at the initial
recognition and those are not obtained for trading purposes. Recognition of fair value differences of those assets are similar to the
financial asset held for trading.
b.
Explanations on Financial Assets Available for Sale and Held to Maturity Investments
b.1. Explanations on Financial Assets Available for Sale
Financial assets available for sale represent non-derivative financial assets other than bank loans and receivables, held to maturity
investments and financial assets at fair value through profit and loss. Initial recognition and subsequent valuation of financial assets
available for sale are performed based on the fair value including transaction costs. The amount arising from the difference between
cost and amortized value is recognized through income statement by using the internal rate of return. If a price does not occur in an
active market, fair value cannot be reliably determined and “Amortized Value” is determined as the fair value using the internal rate
of return. Unrealized gains and losses arising from changes in fair value of the financial assets available for sale are not recognized
in the income statement, they are recognized in the “Marketable Securities Revaluation Fund” until the disposal, sale, redemption or
incurring loss of those assets. Fair value differences recognized under equity arising from the application of fair value are reflected
to the income statement when these assets are sold or when the valuation difference is collected.
