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TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Unconsolidated Financial Statements for the Year Ended
31 December 2014
124
İŞBANK
ANNUAL REPORT 2014
In the Bank’s credit risk management, along the limits as required by legal regulations, the Bank utilizes the risk limits to undertake the maximum credit risk within risk groups or
sectors that the Board of Directors determines. These limits are determined such a way that prevents risk concentration on particular sectors.
Excess risk limits up to legal requirements and boundaries limits are considered as an exception. The Board of Directors has the authority in exception process. The results of the
control of risk limits and the evaluations of these limits are presented by Internal Audit and Risk Management Group to Key Management and Board of Directors.
The Bank uses credit decision support systems which are created for the purpose of credit risk management, lending decisions, controlling the credit process and credit provisioning.
The consistency of the credit decision support systems with the structure of the Bank’s activities, size and complexity is examined continuously by internal systems. Credit decision
support systems contain the Risk Committee assessment and approval of Board of Directors.
Asset and Liability Management Risk
Asset-liability management risk defined as the risk of Bank’s incurring loss due to managing all financial risks that are inflicted from the Bank's assets, liabilities and off-balance sheet
transactions, ineffectively. Trading book portfolio’s market risk, structural interest rate risk and liquidity risk of the banking portfolio; are considered within the scope of the asset
liability management.
All principles and procedures related to the generating and management of asset and liability structure and “Risk Appetite” related to the capital to be allocated, are determined by
the Board of Director. Complying the established risk limits and being at the limits that stipulated by the legislation are the primary priority of Asset-liability management risk. Risk
limits are determined by the Board of Directors by taking into consideration of the Bank's liquidity, target income level and general expectations about changes in risk factors and risk
appetite.
Board of Directors and the Audit Committee are responsible for following the Bank's capital is used optimally; for this purpose, checking the status against risk limits and providing the
necessary actions are taken.
Asset and Liability Management Committee is responsible for managing the Asset and Liability risk within the framework of operating principles that are involved in the risk appetite
and risk limits are set by the Board of Directors in accordance with the policy statement.
Measurement of the Asset and Liability Management’s risk, reporting of the measurement results and monitoring the compliance with risk limits are the responsibility of the Risk
Management Department. The course of the risk taken is examined through different scenarios. The measurement results are tested in terms of reliability and integrity. Information
related to asset-liability management risk is reported to the Board of Directors by the Department of Risk Management through the Risk Committee and the Audit Committee.
Asset and liability management processes and compliance with the provisions of the policy are controlled and audited by the internal audit system. The execution of the audit,
reporting the audit results, action plans for the elimination of errors and gaps identified as a result of inspections regarding the fulfillment of the principles, are determined by the
Board of Directors.
Operational Risk
Operational risk is defined as “the probability of loss due to the inadequate or failed internal processes, people, systems, external factors or legal risks”. All risks except financial
risks are considered within the scope of operational risk. Studies consisted and are formed of occur by execution of identification, definition, measurement, analysis, monitoring
of operational risk, providing and reporting the necessary control related to monitoring the progress of our country and the world, the development of techniques and methods,
necessary legal reporting, notification and conduct of follow-up transactions. Studies on the subject are conducted by the Department of Risk Management.
Operational risks that arise due to the activities are defined in "Bank Risk Catalogue" and classified in respect of species. Bank Risk Catalogue is kind of the fundamental document that
used for identification and classification of all at the risk that may be encountered. It is updated in line with the changes in the nature of the processes and activities.
Qualitative and quantitative methods are used in a combination for measurement and evaluation of the operational risks. In this process, information uses that obtained from "Impact-
Probability Analysis", "Missing Event Data Analysis", "Risk Indicators" methods. Methods prescribed by legal regulations are applied as minimum in determining the capital requirement
level for the operating risk.
All risks are assessed in the context of operational risk, loss events and the risk indicators same as operational risks that occurred in the Bank, are monitored on a regular basis by the
Department of Risk Management and reported periodically to the Risk Committee and the Board of Directors.
XII. Explanations on Other Price Risks
The Bank has investments in companies traded on the Borsa İstanbul A.Ş. is exposed to equity securities price risk. Shares are being acquired for investment purposes rather than.
The Bank's sensitivity to equity price risk at the reporting date an analysis was conducted to measure. In the analysis, with the assumption of all other variables were held constant
(stock prices) are 10% higher or lower and is assumed that. According to this assumption in equity securities revaluation reserve account TL 725,125 (31 December 2013: TL 558,570)
increase/decrease is expected to be. This, in fact, the fair value of publicly traded subsidiaries and associates the increase/decrease is due.
XIII. Explanations on Presentation of Assets and Liabilities at Fair Value
1. Information on fair values of financial assets and liabilities
Book Value
Fair Value
Current Period
Prior Period
Current Period
Prior Period
Financial Assets
Money Market Placements
Banks
1,393,221
1,527,610
1,395,713
1,528,476
Financial Assets Available for Sale
39,289,961
28,347,830
39,289,961
28,347,830
Investments Held to Maturity
1,301,104
7,627,448
1,304,277
7,732,705
Loans
155,874,278
135,281,021
156,953,561
135,246,177
Financial Liabilities
Banks Deposits
6,397,382
3,979,410
6,398,642
3,978,557
Other Deposits
127,153,809
116,995,355
127,204,047
116,991,760
Funds Provided from Other Financial Institutions
20,669,163
15,921,894
20,599,089
15,847,426
Marketable Securities Issued
(1)
20,422,541
13,079,569
20,762,846
12,834,095
Miscellaneous Payables
5,508,091
4,337,257
5,508,091
4,337,257
(1)
Includes subordinated bonds which are classified on the balance sheet as subordinated loans.