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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
h.2. Reserves for employee benefits:
According to the related regulation and the collective bargaining agreements, the Parent Bank is obliged to pay employee
termination benefits to employees who retire, die, quit for their military service obligations, who have been dismissed as defined
in the related regulation or to the female employees who have voluntarily quit within one year after the date of their marriage.
In accordance with the related regulations, the amount of employee termination benefits is TL 3,254.44 (full TL amount as of
31 December 2013), which is one month salary for each service year and cannot exceed the base salary ceiling for employee
termination benefits. A provision for severance pay to allocate that employees need to be paid upon retirement is calculated by
estimating the present value of probable amount. The Group’s obligation arising from severance pay was determined in accordance
with the actuarial report regulated according to “IAS 19-Employee Benefits”. In this context, as of 31 December 2013 TL 376,229
provision was set aside and reflected to the financial statements. (31 December 2012: TL 377,765).
The main actuarial assumptions used in the calculation of the employee termination benefits are as follows:
• Discount and inflation rates, which vary by years, were used for the calculation and the real rate of increase in salaries was taken
as 2%.
• TL 3,254.44 (full TL amount) salary ceiling, which was effective as at 31 December 2013 was taken into account for the
calculations.
• The age of retirement is considered as the earliest age possible that an individual can retire.
• CSO 1980 table is used for the mortality rate for female and male employees
The movements related to provision for employee termination benefits are given below.
Current Period
Prior Period
Present value of defined benefit obligation at the beginning of the period
377,765
260,666
Service Cost
33,129
23,821
Interest Cost
27,422
26,076
Benefits paid
(23,406)
(21,482)
Loss/(Gain) due to Settlements/Reductions/Terminations
2,613
3,475
Actuarial loss/(gain)
(41,294)
85,209
Defined benefit obligation at the end of the period
376,229
377,765
In addition to the employee termination benefits, the Parent Bank and consolidated Group companies also allocate provisions for the
unused vacation pay liability. As of 31 December 2013, provision for unused vacation pay is amounting to TL 37,267 (31 December
2012: TL 28,926).
h.3. Provisions for exchange losses in the principal amount of foreign currency indexed loans:
Since foreign currency indexed loans are followed based on the rates on the lending date, the Parent Bank incurs a loss if the
exchange rates decrease and makes profit if the exchange rate increases. As of 31 December 2013, provision amount for the
currency evaluation losses in the principal amount of foreign currency indexed loans is TL 666 and this amount is offset against
foreign currency indexed loan balance in the financial statements.
h.4. Specific provisions for non-cash loans, which are not indemnified and not converted into cash:
As of 31 December 2013, TL 91,086 provision (31 December 2012: TL 102,568) is allocated for the non-cash loans of companies
whose loans are followed under non-performing loans accounts.
h.5. Information on other provisions:
h.5.1. Provisions for potential risks:
The Parent Bank management provided a general provision for the possible result of the negative circumstances which may arise
from any changes in economy or market conditions amounting TL 1,000,000 of which was had been recognized as expense in the
prior periods.
