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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
141
İŞBANK
ANNUAL REPORT 2014
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
338,434
342,205
Service Cost
28,868
29,612
Interest Cost
34,800
24,749
Benefits paid
(15,931)
(19,434)
Loss/(Gain) due to Settlements / Reductions / Terminations
2,007
2,473
Actuarial loss/(gain)
52,017
(41,171)
Defined benefit obligation at the end of the period
440,195
338,434
In addition to the employee termination benefits, the Bank also allocates provision for the unused vacation pay liability. As of 31 December 2014, provision for unused vacation pay is
amounting to TL 30,516 (31 December 2013: TL 26,513).
i.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 Bank incurs a loss if the exchange rates decrease and makes profit if the exchange rate increases. As of 31 December 2014, provision amount for the currency evaluation
losses in the principal amount of foreign currency indexed loans is TL 6,167 and this amount is offset against foreign currency indexed loan balance in the financial statements.
i.4.
As of 31 December 2014, the Bank’s specific provisions for unindemnified non-cash loans balance is TL 66,882 which is allocated for the non-cash loans of companies whose loans
are followed under “Non-performing Loans” accounts (31 December 2013: TL 88,971).
i.5. Information on other provisions:
i.5.1.
Provisions for potential risks:
The 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 this amount was had been recognized as expense in the prior periods.
i.5.2.
Liabilities arising from retirement benefits:
Liabilities of pension funds founded as per the Social Security Act:
Within the scope of the explanations given in Section Three Note XVII, in the actuarial report which was prepared as of 31 December 2014 for Türkiye İş Bankası A.Ş. Emekli Sandığı
Vakfı (İşbank Pension Fund), of which each Bank employee is a member, and which has been established according to the provisional Article 20 of the Social Security Act No. 506, the
amount of actuarial and technical deficit stands at TL 1,898,407 (31 December 2013: TL 1,775,839).
The above mentioned actuarial audit, which was made in accordance with the principles of the related law, measures the cash value of the liability as of 31 December 2014, in other
words, it measures the amount to be paid to the Social Security Institution by the Bank. Actuarial assumptions used in the calculation are given below.
• 9.8% technical deficit interest rate is used.
• 34.5% total premium rate is used.
• CSO 1980 woman/man mortality tables are used.
Below table shows the cash values of premium and salary payments of the Bank as of 31 December 2014, taking the health expenses within the Social Security Institution limits into
account.
Current Period
Prior Period
Net Present Value of Total Liabilities Other Than Health
(5,397,570)
(4,900,737)
Net Present Value of Long Term Insurance Line Premiums
2,433,204
2,173,772
Net Present Value of Total Liabilities Other Than Health
(2,964,366)
(2,726,965)
Net Present Value of Health Liabilities
(726,581)
(660,534)
Net Present Value of Health Premiums
1,382,502
1,235,098
Net Present Value of Health Liabilities
655,921
574,564
Pension Fund Assets
410,038
376,562
Amount of Actuarial and Technical Deficit
(1,898,407)
(1,775,839)
The assets of the pension fund are as follows.
Current Period
Prior Period
Cash
243,003
253,716
Securities Portfolio
116,934
96,722
Other
50,101
26,124
Total
410,038
376,562
On the other hand, after the transfer, the currently paid health benefits will be revised within the framework of the Social Security Institution legislation and related regulations.
i.5.3.
Provision of credit cards and promotion of banking services applications:
The Bank has recognized provisions amounting to TL 67,203 for the amount which is recognized
within the framework of credit card expenses of credit card customers or promotions for banking services. (31 December 2013: TL 62,797)
i.5.4.
As announced by material event disclosures dated 31 December 2012, an inspection, which is related to payments (contributions) made by Bank to “Türkiye İş Bankası A.Ş.
Mensupları Munzam Sosyal Güvenlik ve Yardımlaşma Sandığı Vakfı” which is founded according to Turkish Commercial Law and Civil Law, was conducted by the Tax Audit Committee
Inspectors for fulfilling its obligations within the framework of the Foundation Share and the relevant legislation. In relation to these payments made by the Bank, the tax auditors
conducted an inspection and claimed that the payments should have been considered as wages and subject to withholding tax as the beneficiaries of the payments were the
employees of the Bank. Based upon initial inspection reports for 2007 and 2008, the Turkish tax authorities notified the Bank of their request for income tax, stamp tax and tax
penalties for such years amounting to TL 74,353.