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İş Bankası
Annual Report 2013
Financial Information and Risk Management
TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2013
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 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 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
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 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 Turkey (CBT). 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.
By taking into account the global and national economic outlook, market conditions, current and potential credit customers’
expectations and tendencies, and risks such as; interest rate, liquidity and currency risks, the Group’s placements are focused on
high yielding and low risk assets and safety principle has always been the top priority. Generally a pricing policy aiming at high
return is implemented in the long-term placements of the Group, and attention is paid to the maximum use of non-interest income
generation opportunities.
Main growth targets for different asset classes are set by the long-term plans shaped along with budgeting; and the Parent 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 Parent Bank’s own transaction and control limits are also effectively monitored in order to avoid limit
overrides.
The Parent Bank’s asset-liability management is executed by the Asset-Liability Management Committee, within the risk limits
specified 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.
