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TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Consolidated Financial Statements for the Year Ended
31 December 2014
196
İŞBANK
ANNUAL REPORT 2014
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 Parent 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 Parent 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 Parent 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 and 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 use 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 Parent 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 Risk
The Group has investments in companies traded on the ISE 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 403,209 (31 December 2013: TL 275,859)
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
263,559
140,375
263,559
140,375
Banks
6,006,457
5,186,011
6,028,477
5,205,393
Financial Assets Available for Sale
45,677,129
34,275,403
45,677,129
34,275,403
Investments Held to Maturity
1,391,860
7,728,447
1,396,454
7,833,550
Loans
(1)
169,761,297
146,682,382
170,879,470
146,830,129
Financial Liabilities
Banks Deposits
6,689,292
4,192,301
6,683,411
4,190,672
Other Deposits
127,811,934
117,645,497
127,854,930
117,626,195
Funds Provided from Other Financial
Institutions
34,176,072
27,330,455
33,961,600
27,084,100
Marketable Securities Issued
21,865,876
(2)
13,060,987
(3)
22,370,535
12,817,699
Miscellaneous Payables
14,434,581
11,156,094
14,434,581
11,156,094
(1)
Includes factoring amounts.
(2)
Includes subordinated bonds which are classified on the balance sheet as subordinated loans.
(3)
Secondary subordinated issued bonds having credit quality, which are classified on the balance sheet under the subordinated loans, amounting to TL 2,984,143 are also included.
Fair values of investments held to maturity and the marketable securities issued are determined by using the market prices; in cases where market prices cannot be measured, quoted
market prices of other securities that are subject to amortization having similar interest, maturity and other conditions are taken as the basis for the fair value determination.