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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
Information on the Bank’s internal capital requirements within the scope of the internal capital adequacy assessment process in
order to evaluate the adequacy of the approach in terms of current and future activities:
On-balance sheet and off-balance sheet financial risks and activities arising from financial assets and liabilities, against damage
caused by exposure to financial risk that are necessary to determine the level of capital and the determined level, taking into
consideration the specified minimum levels of statutory and internal continuity of the supply and monitoring process “Capital
Adequacy Policy” implemented within the framework by the Bank.
Capital adequacy level is monitored and analyzed taking into consideration the possible changes on economic conjuncture, risk
factors, balance sheet structure and size, profitability and, the dividend policy by the Bank. As for the level of capital adequacy with a
view to a forward-looking analysis and projection studies have an affect the Bank’s planning and decision processes.
Internal capital adequacy assessment process covers determining the risks to an internal perspective which are faced by the Bank
and also covers the necessary capital amount against the risks and evaluation within the framework of the principles and methods.
This process contains the assessments of capital adequacy under normal conditions and with the evaluation of working under stress
conditions.
During the assessment of the Bank’s internal capital adequacy; in addition to credit risk, market risk and operational risk, considered
to be important by the Bank and for the other quantifiable risks, there are generally accepted methods of calculating capital
requirements.
II. Explanations on Consolidated Credit Risk
1.
Credit risk is defined as the possibility of incurring loss where the counterparty in a transaction, partially or completely fails to
meet its contractual obligations in due time in an agreement with the Group.
Banks and financial institutions affiliated to the Group, carry out their placement activities in accordance with the credit limitations
stipulated by legal regulations of the countries in which they operate.
The Parent Bank’s position against the credit risk limits defined by the current legislation is monitored by the Board. Within this
framework, loans extended to Risk Groups and the Parent Bank’s Risk Group, including the Parent Bank; loans in high amounts and
limitations regarding the shares in participations are monitored according to the limits determined in connection with the size of the
shareholders’ equity calculated on a bank-only and consolidated basis.
Credit risk limits of customers are determined depending on the financial situation and loan requirements of the borrowers, in strict
compliance with the relevant banking legislation, within the framework of loan authorization limits of Branches, Regional Offices,
Loan Divisions, the Deputy Chief Executives responsible for loans, the CEO, the Credit Committee and the Board of Directors. These
limits may be changed as may be deemed necessary by the Bank. Moreover, all commercial credit limits are revised periodically,
provided that each period does not exceed a year. Furthermore, the borrowers and borrower groups forming a large proportion of
the overall placement are subject to risk limits in order to provide further minimization of potential risk.
The geographical distribution of borrowers is consistent with the concentration of industrial and commercial activities in Turkey.
The distribution of borrowers by sector is monitored closely for each period and sectoral risk limits have been determined to prevent
concentration of risk in sectoral sense.
The credit-worthiness of customers is monitored on a consistent basis by using company rating and scoring models specially
developed for this purpose, and the audit of statements of account received is assured to have been made in accordance with the
provisions as stipulated by the relevant legislation.
