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TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Consolidated Financial Statements for the Year Ended
31 December 2014
197
İŞBANK
ANNUAL REPORT 2014
FINANCIAL INFORMATION AND
RISK MANAGEMENT
Market prices are taken into account in determining the fair values of the securities available for sale. When the prices cannot be measured in an active market, fair values are not
deemed to be reliably determined and amortized cost, calculated by the internal rate of return method, are taken into account as the fair values.
Fair values of banks, loans granted, deposits and funds borrowed from other financial institutions are calculated by discounting the amounts in each maturity bracket formed
according to repricing periods, using the rate corresponding to relevant maturity bracket in the discount curves based on current market conditions.
2. Information on fair value measurements recognized in the financial statements
TFRS 13 “Fair Value Measurement” requires the items, which are recognized in the balance sheet at their fair values to be shown in the notes by being classified within a range.
According to this, the related financial instruments are classified into three levels in such a way that they will express the significance of the data used in fair value measurements. At
the first level, there are financial instruments, whose fair values are determined according to quoted prices in active markets for identical assets or liabilities, at the second level, there
are financial instruments, whose fair values are determined by directly or indirectly observable market data, and at the third level, there are financial instruments, whose fair values
are determined by the data, which are not based on observable market data. The financial assets, which are recognized in the consolidated financial statements at their fair values, are
shown below as classified according to the aforementioned principles of ranking.
Current Period
Level 1
Level 2
Level 3
Financial Assets at Fair Value Through Profit and Loss
Debt Securities
771,699
29,205
1,072
Equity Securities
69,843
Derivative Financial Assets Held for Trading
1,081,071
Other
9,637
297,643
Financial Assets Available-for-Sale
Debt Securities
36,965,085
7,625,254
744,601
Equity Securities
(1)
36,614
Other
241,624
Investments in Subsidiaries and Associates
(2)
4,032,090
Derivative Financial Liabilities
749,841
(1)
Since they are not traded in an active market, the equity securities (TL 63,951) under the financial assets available-for-sale are shown in the financial statements at acquisition cost and the related securities are not
shown in this table.
(2)
Since unlisted investments in associates and subsidiaries are recognized at acquisition cost within the framework of TAS 39, these companies are not included in table.
Prior Period
Level 1
Level 2
Level 3
Financial Assets at Fair Value Through Profit and Loss
Debt Securities
1,357,391
12,298
57,228
Equity Securities
55,273
Derivative Financial Assets Held for Trading
1,288,834
Other
12,832
152,169
Financial Assets Available-for-Sale
Debt Securities
23,280,621
6,457,145
4,088,062
Equity Securities
(1)
20,889
Other
132,969
219,824
Investments in Subsidiaries and Associates
(2)
2,758,589
Derivative Financial Liabilities
1,197,345
(1)
Since they are not traded in an active market, the equity securities (TL 75,893) under the financial assets available-for-sale are shown in the financial statements at acquisition cost and the related securities are not
shown in this table.
(2)
Since the unlisted investments in associates and subsidiaries are recognized at acquisition cost within the framework of TAS 39, these companies are not included in the table.
The movement table of financial assets at level 3 is given below.
Current Period
Prior Period
Balance at the Beginning of the Period
4,145,290
1,227,911
Purchases
53,576
2,995,775
Redemption or Sales
(506,758)
(297,139)
Valuation Difference
33,337
171,532
Transfers
(2,979,772)
47,211
Balance at the end of the Period
745,673
4,145,290
XIV. Explanations on Transactions Carried Out on Behalf of Third Parties and Fiduciary Transactions
The Group gives trading, custody, fund management services in the name and on the account of its customers. The Group has no fiduciary transactions.
XV. Explanations on Consolidated Business Segmentation
The Group’s operations are classified as corporate, commercial, retail and private banking, and treasury/investment banking. While the commercial and corporate operations are
differentiated by the Parent Bank and its financial institutions, according to their own criterion, in the classification of other operations, the same methods are applied by the Group.
Services to the large corporations, SMEs and other trading companies are provided through various financial media within the course of the corporate and commercial operations.
Services such as project financing, operating and investment loans, deposit and cash management, credit cards, cheques and bills, foreign trade transactions and financing, letter
of guarantee, letter of credit, forfeiting, foreign currency trading, bill collections, payrolls, investment accounts, tax collections and other banking services are provided for the
aforementioned customer segments.
Retail banking services are comprised of individuals needs such as deposits, consumer loans, overdraft accounts, credit cards, bill collections, remittances, foreign currency trading,
safe-deposit boxes, insurance, tax collections, investment accounts and by other banking services. Private banking category, are comprised of any kind of financial and cash
management related services are provided for individuals within the high-income segment.
Treasury transactions are comprised of medium and long term funding tools such as securities trading, money market transactions, spot and forward TL and foreign currency trading,
and derivative transactions such as forwards, swaps, futures and options, as well as syndications and securitizations.
The Group’s investments in unconsolidated associates and subsidiaries are evaluated within the context of investment banking.