175 / 236
TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Consolidated Financial Statements for the Year Ended
31 December 2014
175
İŞBANK
ANNUAL REPORT 2014
FINANCIAL INFORMATION AND
RISK MANAGEMENT
United Arab Emirates
The companies operating in the free zones of Dubai are not subject to tax according to the country’s legislation.
4. Transfer Pricing:
Transfer pricing is regulated through Article 13 of Corporate Tax Law titled “Transfer Pricing through Camouflage of Earnings”. Detailed information for the practice regarding the
subject is found in the “General Communiqué Regarding Camouflage of Earnings through Transfer Pricing”.
According to the aforementioned regulations, in the case of making purchase or sales of goods or services with relevant persons/corporations at a price that is determined against
“arm’s length principle”, the gain is considered to be distributed implicitly through transfer pricing and such distribution of gains is not subject to deductions in means of corporate tax.
XXII. Borrowings
The Parent Bank and its consolidated Group companies whenever required, generates funds from individuals and institutions residing domestically and abroad by approaching the
borrowing instruments in the form of syndication, securitization, collateralized borrowing and issue of bonds/bills. Such transactions are at first carried at acquisition cost, and in the
following periods they are valued at amortized cost measured by using the internal rate of return method.
XXIII. Equity Shares and Issuance of Equity Shares
Share issuance related to costs is recognized as expenses.
Dividend income related with the equity shares are determined by the General Assembly of the Shareholders.
Weighted average number of shares outstanding is taken into account in the calculation of earnings per share. In case the number of shares increases by way of bonus issues as a
result of the capital increases made by using the internal sources, the calculation of earnings per share is made by adjusting the weighted average number of shares, which were
previously calculated as at the comparable periods. The adjustment means that the number of shares used in calculation is taken into consideration as if the bonus issue occurred at
the beginning of the comparable period. In case such changes in the number of shares occur after the balance sheet date, but before the ratification of the financial statements to
be published, the calculation of earnings per share are based on the number of new shares. The Parent Bank’s earnings per share calculations taking place in the consolidated income
statement are as follows.
Current Period
Prior Period
Profit attributable to shareholders
3,351,828
3,235,921
Weighted average number of shares (thousands)
112,502,250
112,502,250
Earnings per share – (in exact TL)
0.029793431
0.028763167
XXIV. Bank Acceptances and Bills of Guarantee
Bill guarantees and acceptances are realized simultaneously with the customer payments and they are presented as possible liabilities and commitments in the off-balance sheet
accounts.
XXV. Government Incentives
None.
XXVI. Segment Reporting
Business segment is the part of an enterprise,
• which conducts business operations where it can gain revenues and make expenditures (including the revenues and expenses related to the transactions made with the other
parts of the enterprise),
• whose operating results are regularly monitored by the authorities with the power to make decisions related to the operations of the enterprise in order to make decisions related
to the funds to be allocated to the segment and to evaluate the performance of the segment, and
• which has its separate financial information.
Information on the Group’s business segmentation and related information is explained in Section Four Note XV.
XXVII. Other Disclosures
In order to be consistent on the financial statements, reclassifications have been made on equity items of the comparable financial statements for the year ending 31 December 2013.
SECTION FOUR: INFORMATION ON THE FINANCIAL POSITION AND RISKMANAGEMENT OF THE GROUP
I. Explanations on Consolidated Capital Adequacy Ratio
The Group’s and the Parent Bank’s Common Equity Tier I capital ratios are 12.91% and 13.70%, Tier I capital ratios are 12.87% and 13.60%, capital adequacy standard ratios are
15.31% and 16.02% respectively. Consolidated and unconsolidated Capital adequacy ratios are calculated within the scope of the “Regulation on Measurement and Evaluation of
Capital Adequacy of Banks”, “Regulation on Credit Risk Mitigation Techniques” and “Regulation on Calculation of Risk Weighted Amounts for Securitizations” published in the Official
Gazette no. 28337 dated 28 June 2012, effectiveness date is 1 July 2012, and the calculations are made according to the “Regulation on Equities of Banks” published in the Official
Gazette numbered 28756 dated 5 September 2013.
Capital adequacy ratios are calculated from obligated required capital of the credit risk, the market risk and the operational risk. The amount subject to credit risk on balance sheet
assets and non-cash loans, commitments and types of derivative financial instruments, risk classes and ratings of risk weights are evaluated by taking into account the relevant
legislation.
The amount subject to credit risk for non-cash loans and commitments are considered by using the conversion rates which are defined in the 5th article of “Regulation on
Measurement and Evaluation of Capital Adequacy of Banks” after deducting specific provision amount which is calculated from the article of “Determining the Nature of Loans and
Receivables and Principles and Procedures on the Allocation of Loan and Receivable Provisions” published in the Official Gazette no.26333 dated 1 November 2006. The items, which
are considered as deductions from capital amount, are not considered in the calculation of capital requirement of credit risk.
Such financial assets, liabilities and off-balance sheet transactions are classified in two separate portfolio as "trading accounts" and "banking accounts" in accordance with the legal
regulations and the Parent Bank's internal risk policies. Actively traded asset on balance sheet, derivative transactions held for trading, and trading accounts comprising foreign
currency positions are used in calculation of market risk according to the Standard Method by the Bank. Financial instruments and non-financial assets which are excluded from trading
book and classified as banking book are subject to calculation of credit risk.
In the calculation of the Parent Bank’s operational risk, “Basic Indicator Method” is used.