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Financial Information and Risk
Management
İş Bankası
Annual Report 2013
TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Unconsolidated Financial Statements
for the Year Ended 31 December 2013
b.2. Explanations on Held to Maturity Investments
Held to maturity investments are the investments, for which there is an intention of holding until maturity and the relevant
conditions for fulfillment of such intention, including the funding ability, and for which there are fixed or determinable payments
with fixed maturity; and which are recognized at fair value at initial recognition.
Held to maturity investments with the initial recognition at fair value including transaction costs are subject to valuation with their
discounted cost value by using the internal rate of return method less provision for any impairment, if any. Interest income from held
to maturity investments are recognized in the income statement as an interest income.
There are no financial assets that are classified by the Bank as held to maturity investments, however, they cannot be classified
under this classification for two years for not satisfying the requirements of the related classification.
3. Loans and Receivables
Loans and receivables represent unquoted financial assets in an active market that provide money, goods or services to the debtor
with fixed or determinable payments.
Loans and receivables are initially recognized with their fair values including settlement costs and carried at their amortized costs
calculated using the internal rate of return at the subsequent recognition.
Retail and corporate loans that are followed under cash loans are recognized at original maturities, based on their contents, under
the accounts defined by the Uniform Code of Accounts (UCA) and the Explanatory Manual.
Foreign currency indexed consumer and corporate loans are followed at TRY accounts after converting into TRY by using the
opening exchange rates. At the subsequent periods, increases and decreases in the loan capital are recognized under the foreign
currency income and expense accounts in the income statement depending on foreign currency rates being higher or lower than
opening date rates. Repayments are calculated using the exchange rates at the repayment dates and exchange differences are
recognized under the foreign currency income and expense accounts in the income statement.
VIII. Impairment of Financial Assets
At each balance sheet date, the Bank reviews the carrying amounts of its financial asset or group of financial assets whether there is
an objective indication that those assets have suffered an impairment loss. If such indication exists, the Bank determines the related
impairment amount.
A financial asset or a group of financial assets is subject to impairment loss only if there is an objective indication that the occurrence
of one or more than one event (“loss event”) subsequent to the initial recognition of that asset has an effect on the reliable estimate
of the expected future cash flows of the related financial asset and asset group. Irrespective of their high probability of incurrence,
future expected losses are not recognized.
Impairment losses attributable to the held to maturity investments are measured as the difference between the present values of
estimated future cash flows discounted using the original interest rate of financial asset and the book value of asset. The related
difference is recognized as a loss and it decreases the book value of the financial asset. At subsequent periods, if the impairment
loss amount decreases, impairment loss recognized is reversed.
When a decline occurs in the fair values of the “financial assets available for sale” of which value decreases and increases are
recognized in equity, the accumulated profit/loss that had been recognized directly in equity is transferred from equity to period
profit or loss. If, in a subsequent period, the fair value of the related asset increases, the impairment loss is reversed, with the
amount of the reversal recognized in profit or loss.
Loans are classified and followed in line with the provisions of the “Determining the Nature of Loans and Receivables and Principles
and Procedures on the Allocation of Loan and Receivable Provisions”, 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 mentioned
the minimum provision rates. 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 Bank provides “general allowances” for loan and other receivables classified in accordance with
the Regulation on Identification of and Provision against Non-Performing Loans and Other Receivables.
