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TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Unconsolidated Financial Statements for the Year Ended
31 December 2014
FINANCIAL INFORMATION AND
RISK MANAGEMENT
109
İŞBANK
ANNUAL REPORT 2014
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.
Utmost importance is given to ensure that loans are furnished with collaterals. Most of the loans extended are collateralized by taking real estate, movable or commercial enterprise
under pledge, promissory notes and other liquid assets as collateral, or by acceptance of bank letters of guarantee and individual or corporate guarantees.
Non-performing and impaired loans has classified in accordance with the Regulation on Identification of and Provision against Non-Performing Loans and Other Receivables (the
Provisioning Regulation) published on the Official Gazette no.2633 dated 1 November 2006. The detailed descriptions of these methods correspond with accounting practices, are
included in Section Three Note VIII.
Credit risk is the risk reduction effects without taking into consideration the total amount of exposures after offsetting transactions with different risk classes according to the types
and amounts of disaggregated risks are listed below the average for the period.
Exposure Categories
(1)
Current Period Risk Amount
Average Risk Amount
(2)
Exposure Categories
Conditional and unconditional exposures to central governments or central banks
64,800,043
63,246,704
Conditional and unconditional exposures to regional governments or local authorities
39,793
42,221
Conditional and unconditional exposures to administrative bodies and non-commercial undertakings
152,818
144,749
Conditional and unconditional exposures to multilateral development banks
1,660
1,549
Conditional and unconditional exposures to international organizations
Conditional and unconditional exposures to banks and brokerage houses
8,287,887
8,540,101
Conditional and unconditional exposures to corporates
107,127,526
100,932,820
Conditional and unconditional retail exposures
44,671,946
41,355,797
Conditional and unconditional exposures secured by real estate property
13,038,213
11,997,672
Past due items
558,780
521,391
Items in regulatory high-risk categories
17,749,443
16,202,338
Exposures in the form of bonds secured by mortgages
Securitization positions
Short term exposures to banks, brokerage houses and corporates
Exposures in the form of collective investment undertakings
410,934
373,178
Other items
14,923,630
13,639,095
(1)
Includes total risk amounts before the effect of credit risk mitigation but after credit conversions.
(2)
Average risk amounts are the arithmetical average of the amounts in quarterly reports prepared.
2.
There are certain control limits on forward transactions in terms of counter parties, and the risks taken for derivative instruments are evaluated along with other potential risks
resulting from the market fluctuations.
3.
As a result of the current level of customers’ needs and the progress in the domestic market in this particular area, the Bank uses derivative transactions either for hedging or for
commercial purposes.
Derivative instruments with a remarkable volume are monitored with consideration that they can always be liquidated in case of need.
4.
Indemnified non-cash loans are considered as having the same risk weights as unpaid cash loans.
The rating and scoring systems applied by the Bank, includes detailed company analysis and enables rating of all companies and loans without any restrictions regarding credibility.
Loans and companies, which have been renewed, restructured or rescheduled, are rated within the scope of this system. Specialized loans are evaluated by a special rating system,
which is based on the credibility of the counterparty as well as the feasibility and risk analysis of the cash flows created mainly by the projects undertaken or the asset financed.
5.
Lending transactions abroad are conducted by determining the country risks of related countries within the context of the current rating system and by taking the market
conditions, country risks, and the relevant legal limitations into account. Furthermore, the credibility of banks and other financial institutions established abroad is examined within
the framework of the rating system that has been developed and credit limits are assigned accordingly.
6.
(i)
The share of the Bank’s receivables from the top 100 and 200 cash loan customers in the overall cash loan portfolio stands at 22%, 28%, respectively (31 December 2013:
21%, 28%).
(ii)
The share of the Bank’s receivables from the top 100 and 200 non-cash loan customers in the overall non-cash portfolio stands at 46%, 56% respectively (31 December 2013:
46%, 57%).
(iii)
The share of the Bank’s cash and non-cash receivables from the top 100 and 200 loan customers in the overall cash and non-cash loans stands at 16%, 21%, respectively (31
December 2013: 16%, 21%).
Companies that are among the top loan customers ranked according to cash, non-cash and total risks are leaders in their own sectors, the loans advanced to them are in line with
their volume of industrial and commercial activity. A significant part of such loans is extended on a project basis, with their repayment sources being analyzed in accordance with the
banking principles to be considered as satisfactory and associated risks are determined and duly covered by obtaining appropriate guarantees when deemed necessary.
7.
The total value of the general provisions allocated for credit risk stands at TL 2,328,896.
8.
The Bank measures the quality of its loan portfolio by applying different rating/scoring models on cash commercial/corporate loans, retail loans and credit cards. The breakdown of
the rating/scoring results, which are classified as “Strong”, “Standard” and “Below Standard” by considering their default features, is shown below.
The loans whose borrowers’ capacity to fulfill their obligations is very good, are defined as “Strong”, whose borrowers’ capacity to fulfill its obligations in due time is reasonable, are
defined as “Standard” and whose borrowers’ capacity to fulfill their obligations is poor, are defined as “Below Standard”.