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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
121
İŞBANK
ANNUAL REPORT 2014
VIII. Explanations on Liquidity Risk
Liquidity risk may occur as a result of funding long-term assets with short-term resources. Utmost care is taken to maintain the consistency between the maturities of assets and
liabilities; strategies are used to acquire funds over longer terms.
The Bank’s principal source of funding is deposits. While the average maturity of deposits is shorter than the average maturity of assets as a result of the market conditions, the
Bank’s wide network of branches and steady core deposit base are its most important safeguards of the supply of funds. The Bank also borrows medium and long-term funds from
institutions abroad.
In order to meet the liquidity requirements that may arise due to market fluctuations, the Bank analyses TL and FC cash flows projections to preserve liquid assets. The term structure
of TL and FC deposits, their costs and movements in the total amounts are monitored on a daily basis, also accounting for developments in former periods and expectations for the
future. Based on cash flow projections, prices are differentiated for different maturities and thereby measures are taken to meet liquidity requirements; moreover liquidity that may
be required for extraordinary circumstances is estimated and alternative liquidity sources are determined for possible utilization.
Furthermore, foreign currency and total liquidity adequacy ratios, which are subject to weekly legal reporting and calculated separately for 7 and 31 days following the reporting date,
and the liquidity adequacy ratios that are calculated based on the stress scenarios built internally by the Bank, are used effectively to manage the liquidity risk.
Evaluated within the framework of the Bank’s asset-liability management risk policy, the limits determined related to the liquidity risk management are monitored by the Risk
Committee and to avoid extraordinary situations where a quick action should be taken due to the unfavorable market conditions, emergency measures and funding plans related to
liquidity risk are put into effect.
As per the Communiqué on “Measurement and Assessment of the Adequacy of Banks’ Liquidity”, the liquidity ratios that are measured for terms of 7 and 31 days should not be less
than 80% and 100%, respectively. Foreign currency liquidity adequacy ratio mean the ratio of foreign currency assets to foreign currency liabilities and the total liquidity adequacy
ratio means the ratio of total assets to total liabilities. The average liquidity adequacy ratios for the year ended 2014 with their prior year comparatives are given below.
Current Period
First Maturity Bracket (Weekly)
Second Maturity Bracket (Monthly)
FC
FC + TL
FC
FC + TL
Average (%)
168.19
145.18
127.64
109.12
Prior Period
First Maturity Bracket (Weekly)
Second Maturity Bracket (Monthly)
FC
FC + TL
FC
FC + TL
Average (%)
149.64
142.48
103.54
107.25
Presentation of assets and liabilities according to their remainingmaturities:
Demand Upto1Month 1-3Months 3-12Months 1-5Years 5YearsandOver Unallocated
(1)
Total
CurrentPeriod
Assets
Cash (Cash in Vault, Foreign Currency Cash, Money in
Transit, Cheques Purchased) and Balances with the
Central Bank of Turkey
8,284,384 16,322,322
24,606,706
Banks
674,341
558,230
49,094
109,817
1,739
1,393,221
Financial Assets at Fair Value through Profit/Loss
311,293 365,276
317,788 219,217
24,681
1,238,255
MoneyMarket Placements
Financial Assets Available for Sale
199,705
142,075 575,324 1,688,664 16,086,543
20,597,650
39,289,961
Loans
2,488,351 14,240,357 13,830,909 48,412,155 61,192,585
15,151,141
558,780 155,874,278
Held toMaturity Investments
40,639 205,201
895,947
159,317
1,301,104
Other Assets
1,115,440
57,419
1,092
30,017
12,864,482 14,068,450
TotalAssets
11,646,781 32,730,356 15,083,223 51,425,463 77,689,418 35,773,472 13,423,262 237,771,975
Liabilities
Bank Deposits
658,231 4,261,806 1,187,544
289,801
6,397,382
Other Deposits
28,772,876 67,508,561 24,034,536 5,754,969 1,082,867
127,153,809
Funds Provided fromOther Financial Institutions
428,751 1,754,869 10,544,785 5,247,615
2,693,143
20,669,163
MoneyMarket Funds
16,385,639
2,724
224,153 1,083,600
17,696,116
Marketable Securities Issued
(2)
1,757,127 2,515,059 4,161,752 5,265,838
6,722,765
20,422,541
Miscellaneous Payables
5,364,116
60,624
17,392
65,959
5,508,091
Other Liabilities
1,806,815
701,356 1,072,322
88,173
36,256,207 39,924,873
TotalLiabilities
29,431,107 97,512,815 30,256,712 22,065,174 12,834,052
9,415,908 36,256,207 237,771,975
LiquidityGap
(17,784,326) (64,782,459) (15,173,489) 29,360,289 64,855,366 26,357,564 (22,832,945)
PriorPeriod
Total Assets
15,677,094 30,615,185 12,706,949 47,998,940 67,126,131
24,972,793 11,402,945 210,500,037
Total Liabilities
25,623,095 94,120,219 23,845,066 22,121,999 9,218,650
5,659,719 29,911,289 210,500,037
LiquidityGap
(9,946,001) (63,505,034) (11,138,117) 25,876,941 57,907,481
19,313,074 (18,508,344)
(1)
Asset items, such as Tangible Assets, Subsidiaries and Associates, Office Supply Inventory, Prepaid Expenses and Non-Performing Loans, which are required for banking operations and which cannot be converted
into cash in short-term, other liabilities such as Provisions which are not considered as payables and Shareholders’ Equity, are shown in ‘Unallocated”.
(2)
Includes subordinated bonds which are classified on the balance sheet as subordinated loans.