RNS Number:0565L
Turk Ekonomi Bankasi A.S.
13 May 2003
VI- Consolidated Interest Rate Risk
Interest rate risk shows the loss probability related to the changes in the
interest rates depending on the Parent Bank's position, and it is managed by the
Treasury Department. The interest rate sensitivity of assets, liabilities and
off-balance sheet items related to this risk are measured by using the standard
method. The first step at calculation of interest rate risk, is to place the
instruments subject to interest rate risk in the appropriate one of the 13
maturity sections according to the remaining time to maturity or to the
reprising. At the second step, the instruments with variety of maturities are
weighted according to their risks for reflecting the interest rate risk
volatilities that match their maturities.
The first priority of the Group's risk management is to protect from interest
rate volatility. All types of sensitivity analysis performed within the context
is calculated by the risk management and reported to the Asset-Liability
Committee.
Work is performed regarding interest income according to the macro economical
indicators in the Group's budget estimations and the effects of the market
interest fluctuations on the financial position and cash flow are purified at
the maximum level possible by means of target revisions.
The Group management follows the market interest rates daily and determines the
interest rates of the Parent Company Bank when necessary.
Since the Group does not permit or imposes limits on maturity mismatches, it is
not expected that the Group will face a significant interest rate risk.
Information related to the interest rate sensitivity of assets, liabilities and
off-balance sheet items based on reprising dates):
Up to 1 1-3 3-6 6-12 1 Year and
Months Months Months Months Over Demand Total
Current Period
Assets
Cash (cash in vault, foreign 474,701 - - - - 87,008 561,709
currency cash, money in
transit, cheques purchased)
and balances with the
Central Bank of Turkey
Due from Banks and other 1,353,093 14,935 11,082 2,670 - 66,699 1,448,479
financial institutions
Trading securities 2,528 28,653 11,123 6,777 709 272 50,062
Securities - 16,856 - - - 9 16,865
available-for-sale
Loans 401,266 252,771 300,688 154,660 199,127 4,962 1,313,474
Securities held-to-maturity 207 36,350 1,542 1,298 224 - 39,621
Other assets 5,449 80,986 14,800 22,919 31,470 118,722 274,346
Total Assets 2,237,244 430,551 339,235 188,324 231,530 277,672 3,704,556
Liabilities
Bank deposits 101,810 2,631 1,000 - - - 105,441
Other deposits 2,239,004 162,245 52,996 82,043 164,034 - 2,700,322
Miscellaneous payables - - - - - 59,814 59,814
Marketable securities issued - - - - - - -
Funds provided from other 33,557 198,170 74,759 101,119 9,871 - 417,476
financial institutions
Other liabilities 2,690 34,247 1,082 233 - 383,251 421,503
Total Liabilities 2,377,061 397,293 129,837 183,395 173,905 443,065 3,704,556
Balance Sheet Interest (139,817) 33,258 209,398 4,929 57,625 (165,393) -
Sensitivity Gap
Off Balance Sheet Interest
Sensitivity Gap
Total Interest Sensitivity (139,817) 33,258 209,398 4,929 57,625 (165,393) -
Gap
The other asset line at the without interest column consists of TL 42,349 amount
tangible fixed assets, TL 3,890 of intangible fixed assets, TL 443 of
participations and TL 338 of subsidiaries and the other liability line consists
of equity total amounting to TL 256,232 and TL 19,246 amount minority interest.
Up to 1 1-3 3-6 6-12 1 Year and
Months Months Months Months Over Demand Total
Prior Period
Assets
Cash (cash in vault, 135,986 - - - - 185,415 321,401
foreign currency cash,
money in transit, cheques
purchased) and balances
with the Central Bank of
Turkey
Due from Banks and other 1,192,046 13,124 - - - 1,605 1,206,775
financial institutions
Trading securities - 3,737 7,849 4,184 - 196 15,966
Securities - - - - - - -
available-for-sale
Loans 313,700 238,169 256,106 268,916 101,887 15,727 1,194,505
Securities 17,566 32,232 38,837 - - 7 88,642
held-to-maturity
Other assets 6,014 63,849 15,483 22,368 28,905 114,281 250,900
Total Assets 1,665,312 351,111 318,275 295,468 130,792 317,231 3,078,189
Liabilities
Bank deposits 84,017 6,070 311 - - - 90,398
Other deposits 1,476,982 240,896 118,090 150,090 77,299 33,437 2,096,794
Miscellaneous payables - - - - - 66,021 66,021
Marketable securities - - - - - - -
issued
Funds provided from other 88,695 219,175 114,350 2,080 15,813 6,030 446,143
financial institutions
Other liabilities 6,740 16,136 4,191 4,764 4,184 342,818 378,833
Total Liabilities 1,656,434 482,277 236,942 156,934 97,296 448,306 3,078,189
Balance Sheet Interest 8,878 (131,166) 81,333 138,534 33,496 (131,075) -
Sensitivity Gap
Off Balance Sheet Interest - - - - - - -
Sensitivity Gap
Total Interest Sensitivity 8,876 (131,166) 81,333 138,534 33,496 (131,075) -
Gap
The other asset line at the without interest column consists of TL 40,280 amount
tangible fixed assets, TL 3,600 of intangible fixed assets, TL 492 of
participations and TL 813 of subsidiaries and the other liability line consists
of equity total amounting to TL 229,340 and TL 18,167 amount minority interest.
Average interest rates applied to monetary financial instruments:
EURO USD YEN TL
% % % %
Current Period
Assets
Cash (cash in vault, foreign currency cash, money in transit, cheques purchased) and 1.43 0.55 - 25.00
balances with the Central Bank of Turkey
Due from Banks and other financial institutions 3.25 1.26 - 45.62
Trading securities 8.10 3.62 - 56.49
Securities available-for-sale - - 3.50 -
Loans 5.58 6.00 - 51.48
Securities held-to-maturity - - - 44.35
Liabilities
Bank deposits 2.75 2.75 - 42.49
Other deposits 2.41 2.59 - 43.01
Miscellaneous payables - - - -
Marketable securities issued - - - -
Funds provided from other financial institutions 5.65 2.88 - 47.43
VII- Consolidated Liquidity Risk
Liquidity risk occurs when there is not sufficient amount of cash or cash flows
to fulfill the cash outflows completely and on time, resulting from the unstable
cash inflows.
Liquidity risk may occur when the market penetration is not enough, when the
open positions cannot be closed urgently with a suitable price and sufficient
amount due to barriers and break-ups at the markets.
The Group's policy is to establish a liquid asset structure that can afford all
kinds of liabilities by liquid sources. In this scope liquidity problem does not
happen at any period. The Boards of Directors of the Group continuously
determines the liquidity ratios and related standards, and controls them, in
order to keep this structure.
There is a system worked on to apply international measurement methods. However,
according to the general policies of the Group, the adaptation of the assets,
liabilities, the interest rates to the payments are always established within
the asset liability management strategies. A positive difference is tried to be
established between the yields of TL and foreign currency assets and liabilities
at the balance sheet and their costs. According to this strategy, the Group pays
special attention not to take maturity risk, and no banking service is marketed
when the price is lower than the financing cost.
When the funding and liquidity sources are considered, the Parent Bank covers
majority of its liquidity need by deposits, and in addition to this source, it
makes use of prefinancing and syndication products to generate additional
sources. Generally the Bank does not prefer to utilize liquidity from interbank
money markets and is in a net lender position in interbank money markets.
Presentation of assets and liabilities according to their remaining maturities :
1-3 Months (*) 3-6 Months 6-12 Months 1 Year and Total
Current Period Demand (**) Over
Assets
Cash (cash in vault, 561,709 - - - - 561,709
foreign currency cash,
money in transit,
cheques purchased) and
Balances with the
Central Bank of Turkey
Due from Banks and other 1,419,792 14,935 11,082 2,670 - 1,448,479
financial institutions
Trading securities 367 16,121 10,735 6,675 16,164 50,062
Securities 9 16,856 - - - 16,865
available-for-sale
Loans 406,228 252,771 300,688 154,660 199,127 1,313,474
Securities 207 - 1,542 1,298 36,574 39,621
held-to-maturity
Other assets 77,142 80,986 14,800 22,919 31,470 274,346
Total Assets 2,465,454 381,669 338,847 188,222 283,335 3,704,556
Liabilities
Bank deposits 58,959 43,015 3,467 - - 105,441
Other deposits 2,239,005 162,245 52,996 82,043 164,033 2,700,322
Funds provided from 33,557 29,987 79,685 190,616 83,631 417,476
other financial
institutions
Marketable securities - - - - - -
issued
Miscellaneous payables 33,000 26,814 - - - 59,814
Other liabilities 385,941 34,247 1,082 233 - 421,503
Total Liabilities 2,750,461 296,308 137,230 272,892 247,665 3,704,556
Net Liquidity Gap (285,007) 85,361 201,617 (84,670) 35,670 -
Prior Period
Total Assets 1,937,357 351,110 318,276 295,468 130,792 3,078,189
Total Liabilities 2,104,736 482,276 236,942 156,934 97,301 3,078,189
Net Liquidity Gap (167,379) (131,166) 81,334 138,534 33,491 -
(*) The maturity of up to 1 month of interbank funds sold amounting to TL
413,033, loans amounting to TL 276,085, and domestic and foreign Banks
placements amounting to TL 839,176 are shown in the demand column. Furthermore,
deposits with maturities up to one month amounting to TL 1,637,853 is included
in the other deposits and shown at the demand columns. The demand column of the
other liabilities consist of shareholders' equity amounting to TL 256,232 and
minority interest amounting to TL 19,246.
(**) Total column includes other assets amounting to TL 47,020 consists of
subsidiaries and participations amounting to TL 781, tangible fixed assets
amounting to TL 42,349 and intangible fixed assets amounting to TL 3,890 and
these are not taken in to consideration at the maturity distribution.
(***) Other assets consists of factoring receivables amounting to TL 66,554 and
other liabilities consists of factoring payables amounting to TL 27,982 under
1-3 months column.
VIII-
Presentation of Assets and Liabilities with Their Fair Values
The table below presents fair values and book values of financial assets and
liabilities which are not reflected at their fair values in the financial
statements.
Securities held for investment purposes at the current period consists of
interest bearing held to maturity assets. The fair value of the held to maturity
assets are determined based on the market value or if the market value cannot be
determined, the fair values are determined based on the presented market prices
of the other marketable securities which are similar in interest rates,
maturities and other conditions.
The approximate fair value of the demand deposits is the amount payable under
demand. The fair values of the floating rate placements and overnight deposits
are considered to be the book values due to short maturities. The approximate
fair value of the deposits with fixed rates and funds collected from other
financial institutions are determined by calculating discounted cash flows by
making use of the money market interest rates used for other liabilities with
similar quality and maturities. The fair value is presented by the book value of
the other payables due to short maturity.
Book Value (*) Fair Value
Current Prior Period Current Prior Period
Period Period
Financial Assets 1,504,965 1,295,417 1,504,163 1,300,770
Due from Groups and other financial 1,448,479 1,206,775 1,448,479 1,206,775
institutions
Securities available-for-sale 16,865 - 16,865 -
Securities held-to-maturity 39,621 88,642 38,819 93,995
Financial Liabilities 3,305,853 2,699,351 3,314,604 2,707,343
InterGroup money market deposits 105,441 90,398 105,634 90,560
Other deposits 2,700,322 2,096,794 2,705,845 2,101,282
Funds provided from other financial 440,276 446,143 443,311 449,480
institutions
Marketable securities issued - - - -
Miscellaneous payables 59,814 66,016 59,814 66,021
(*) Book values do not include interest accruals as of related period ends .
IX- Transactions Made in the Name and Account of the Third Parties,
Fiduciary Transactions
The Group makes purchases from adjudications in the account of the clients, and
gives keeping, management and consultancy services. The Group has no fiduciary
transactions.
X- Operating Segments
Apart from the corporate, commercial, retail and private banking services, the
Group also provides its clients with treasury, financial leasing, factoring,
insurance, asset management, and brokerage services.
Accordingly, the Group operates in private client current accounts, deposit
accounts, products enabling long term investments, exchange and custody
services, credit and debit cards, consumer loans and long term housing loans and
other private banking service areas, and additionally it supports its operations
by products at international banking and asset management areas.
As corporate banking services, corporate banking operations include products
like, automated transfer services, current accounts, deposit accounts, open loan
transactions, lending and other loan services, future and option agreements and
other similar agreement services, provided to meet the needs and expectations of
the domestic and foreign companies with relatively higher gross revenues.
Group provides following services ;
* International banking, corporate and private banking activities through the
Parent Bank and The Economy Bank NV established in the Netherlands,
* Capital market brokerage activities, marketable security buy and sell
activities for Turkish, international companies and individual investors are
provided through TEB Yatirim Menkul Degerler A.S.,
* Domestic and international factoring activities are provided through TEB
Faktoring A.S.,
* All insurance activities except life insurance are provided through TEB
Sigorta A.S.,
* Fund management activities are provided through TEB Portfoy Yonetimi A.S.
The Group does not operate in investment banking, corporate financing and data
processing sectors.
Segment reporting will begin as of January 1, 2004.
SECTION FIVE
FOOTNOTES AND EXPLANATIONS ON CONSOLIDATED FINANCIAL STATEMENTS
I. Footnotes and Explanations Related to the Consolidated Assets
1. Information related to the account of the Central Bank of Turkey:
Current Period Prior Period
Demand Unrestricted Amount 14,800 2,520
Time Unrestricted Amount 327,997 1,802
Total 342,797 4,322
2. Additional information of trading portfolio ( stated at net values ):
a) Trading securities given as collateral or blocked: None.
b) Trading securities subject to repurchase agreements:
Current Period Prior Period
TL FC TL FC
Government bonds 16,726 - - -
Treasury bills 5,670 - - -
Other debt securities - - - -
Group bonds and Group guaranteed bonds - - - -
Asset backed securities - - - -
Other - - - -
Total 22,396 - - -
The repurchase and reverse repurchase agreements of the Parent Bank are included
in the balance sheet accounts after February 1, 2002 due to substance over form
principle in accordance with the December 13, 2001 dated and BDDK DZM. 2/13
numbered official writing of the Banking Regulation and Supervision Agency
announced at the "Banking Accounting Standards, Uniform Chart of Accounts and
Its Explanation" effective with the temporary article 2-a of the Banking Law
4389. Additionally, the above stated financial assets are classified according
to their acquisition purposes in accordance with the Communique No:1 of the "
ARR" effective from October 1, 2002. As December 31, 2001 the total amount of
marketable securities subject to repurchase agreements is TL 141,246 and
included in off-balance sheet items.
3. Information on foreign bank accounts:
Unrestricted Amount Restricted Amount
Current Period Prior Period Current Period Prior Period
European Union countries 222,518 255,678 - -
USA and Canada 377,431 201,775 - -
OECD Countries* 75,636 3,066 - -
Off-shore banking regions 94,202 1,264 - -
Other 59,324 2,591 - -
Total 829,111 464,374 - -
* OECD countries other than European Union countries, USA and Canada
4. Information on reverse repurchase agreements:
Current Period Prior Period
TL FC TL FC
From domestic transactions - - - -
Central Group of Turkey 2,582 - - -
Groups 4,469 - - -
Brokerage Firms - - - -
Other financial institutions - - - -
Other institutions - - - -
Real persons - - - -
From foreign transactions - - - -
Central Groups - - - -
Groups - - - -
Brokerage Firms - - - -
Other financial institutions - - - -
Other institutions - - - -
Real persons - - - -
Total 7,051 - - -
5. Information on available for sale portfolio:
a) Main types of available for sale securities: public sector debt
securities, and other marketable securities and share certificates.
b) Information on available for sale portfolio:
Current Period Prior Period
Debt securities 16,856 -
Quoted in a stock exchange - -
Not quoted 16,856 -
Share certificates 9 -
Quoted in a stock exchange - -
Not quoted 9 -
Provision for impairment (-) - -
Total 16,865 -
These financial assets are classified according to their acquisition purposes as
of October 1, 2002 in accordance with the Communique No:1 of the AAR.
Accordingly information on prior period cannot be presented.
c) Available for sale securities given as collateral or blocked: None.
d) Information on investment securities available-for-sale given as collateral
or blocked : None
e) Information on investment securities available-for-sale subject to
repurchase agreements: None.
6. Information on loans :
a) Information on all types of loans and advances given to shareholders and
employees of the Bank:
Current Period Prior Period
Cash Loans Non-Cash Loans Cash Loans Non-Cash Loans
Direct loans granted to shareholders 100,978 6,730 21,669 1,198
Corporate shareholders 100,978 6,730 21,669 1,198
Real person shareholders - - - -
Indirect loans granted to shareholders - - - -
Loans granted to employees 753 - 517 -
Total 101,731 6,730 22,186 1,198
b) Information about the first and second group loans and other receivables
including loans that have been restructured or rescheduled:
Loans and Other Receivables Under Close
Standard Loans and Other Receivables Monitoring
Loans and Other Restructured or Loans and Other Restructured or
Cash Loans Receivables Rescheduled Receivables Rescheduled
Non-specialized loans 1,302,216 - 836 5,460
Discount notes 42,174 - - -
Export loans 387,669 - - -
Import loans - - - -
Loans given to 137,484 - - -
financial sector
International loans 66,988 - - -
Consumer loans 16,545 - - -
Credit cards 14,715 - - -
Precious metals loans 20,406 - 834 -
Other 616,275 - 2 5,460
Specialized loans - - - -
Other receivables - - - -
Total 1,302,216 - 836 5,460
c) Loans according to their maturity structure :
Loans and Other Receivables Under Close
Standard Loans and Other Receivables Monitoring
Loans and Other Restructured or Loans and Other
Cash Loans Receivables Rescheduled Cash Loans Receivables
Short-term loans 1,109,449 - 2 5,460
Non-specialized loans 1,109,449 - 2 5,460
Specialized loans - - - -
Other receivables - - - -
Medium and long-term 192,767 - 834 -
loans
Non-specialized loans 192,767 - 834 -
Specialized loans - - - -
Other receivables - - - -
Total 1,302,216 - 836 5,460
d) Information on consumer loans:
Medium and Long Term Interest Income Accrual
Short Term Total
Consumer loans-TL 9,279 2,653 11,932 385
Real estate loans 537 639 1,176 23
Automotive loans 3,323 2,014 5,337 112
Consumer loans - - - -
Personnel loans 573 - 573 30
Other consumer loans 4,846 - 4,846 220
Consumer loans- Indexed to FC 4,377 236 4,613 1,758
Real estate loans 1,052 60 1,112 148
Automotive loans 2,417 48 2,465 1,553
Consumer loans 366 - 366 45
Personnel loan 156 50 206 7
Other consumer loans 386 78 464 5
Credit cards 14,715 - 14,715 142
Total Consumer Loans 28,371 2,889 31,260 2,285
d) Loans according to type of borrowers :
Current Period Prior Period
Public 27,240 26,088
Private 1,281,272 1,152,690
Total 1,308,512 1,178,778
f) Domestic and foreign loans:
Current Period Prior Period
Domestic loans 1,215,063 1,111,538
Foreign loans 93,449 67,240
Total 1,308,512 1,178,778
g) Loans granted to subsidiaries and investments: None.
h) Specific provisions provided against loans:
Current Period Prior Period
Specific provisions
Loans and receivables with limited collectibility 63 2,883
Loans and receivables with doubtful collectibility 180 1,548
Uncollectible loans and receivables 15,047 2,483
Total 15,290 6,914
j) Information on loans under follow-up account (Net) :
j.1) Information on loans and other receivables included in loans under
follow-up account which are restructured or rescheduled: None.
j.2) The movement of loans under follow-up:
III. Group: IV. Group: V. Group
Loans and receivables
Loans and receivables with with doubtful
limited collectibility colectibility Uncollectible loans and
receivables
Prior period end 16,444 3,713 2,484
balance
Additions (+) 2,004 3,719 3,430
Transfers from other - 12,977 15,434
categories of loans
under follow-up (+)
Transfers to other 12,977 15,434 -
categories of loans
under follow-up (-)
Collections (-) 683 3,741 1,775
Write-offs (-) - - 6
Indexation difference 3,876 875 586
(-)
Current period end 912 359 18,981
balance
Specific provision (-) 63 180 15,047
Net Balances on 849 179 3,934
Balance Sheet
j.3) Information on foreign currency loans and other receivables under follow-up:
III. Group: IV. Group: V. Group
Loans and receivables with
Loans and receivables with doubtful colectibility
limited collectibility Uncollectible loans and
receivables
Period end balance - - 40
Specific provision (-) - - 40
Net Balances on Balance - - -
Sheet
k) Liquidation policies for the uncollectible loans and other receivables :
The loans and other receivables decided to be uncollectible are written off from
the assets according to the Tax Law by the decision of the top management in
accordance with the "Communique on Methods and Principles for the Determination
of Loans and Other Receivables to be Reserved for and Allocation of Reserves"
related to the clause 12 of article 11 and clause 11 of the article 3 of the
Group Law 4389 changed by the laws 4672 and 4491and announced at the Official
Gazette numbered 24448 and dated June 30, 2001.
7. Information on factoring receivables:
Current Period Prior Period
TL FC TL FC
Short term 41,900 24,654 26,047 23,361
Medium and Long Term - - - -
Total 41,900 24,654 26,047 23,361
8. Information on held to maturity portfolio (Net) :
a) Information on held to maturity portfolio:
Current Period Prior Period
Debt securities 39,621 88,642
Quoted in a stock exchange 39,621 50,062
Not quoted - 38,580
Provision for impairment (-) - -
Total 39,621 88,642
b) Movement of Held to Maturity Portfolio :
Current Period Prior Period
Beginning balance 88,642 -
Effect of inflation (-) 20,967 -
Foreign currency differences on monetary assets 5,284 -
Purchases during year 39,621 -
Disposals through sales and redemptions (72,959) -
Impairment provision - -
Closing Balances 39,621 -
Financial assets are classified according to their acquisition purposes as of
October 1, 2002 in accordance with Communique No:1 related to the AAR. For this
reason, information on prior period cannot be presented.
c.1) Information on accounts in which investment securities held-to-maturity are recorded:
Current Period Prior Period
Historical Cost Valuation Historical Cost Valuation
TL FC TL FC TL FC TL FC
Held to Maturity
Portfolio
Given as 36,781 - 37,513 - 50,062 38,573 55,240 40,049
collateral or
blocked
Subject to repo - - - - - - - -
transactions
Held for - - - - - - - -
structural
position
Receivables from
securities
lending
Other (*) - 2,840 - 2,907 7 - - -
Collaterals on - - - - - - - -
securities
lending
Closing Balances 36,781 2,840 37,513 2,907 50,069 38,573 55,240 40,049
(*) The free marketable securities held by the Group is stated at the Other
line.
There are no free held to maturity securities under held to maturity portfolio
except for the amounts stated above.
c.2) Marketable securities held to maturity given as collateral consist of
public sector debt securities of TL 36,781, given as collateral for
statutory requirements.
Securities held-to-maturity given as collateral or blocked:
Current Period Prior Period
TL FC TL FC
Share certificates - - - -
Bonds and similar investment securities 36,781 - 50,062 38,580
Other - - - -
Total 36,781 - 50,062 38,580
c.3) Securities held-to-maturity subject to repurchase agreements : None.
c.4) Securities held-to-maturity held for structural position: None.
9. Information on investments (Net):
a.1) Information on unconsolidated participations:
Group's share percentage-If
Address different voting percentage(%) Group's risk group share
Description (City/ Country) percentage (%)
Varlik Yatirim Ortakligi A.S. Istanbul /Turkey 24.40 34.00
a.2) Information on investments as presented in table a.1:(*) :
Marketable Current Period
Total Total Total Interest Securities Income/Loss Prior Period
Assets Equity Fixed Income Income Income/Loss Fair
Assets Value
1,396 1,371 5 160 - 55 365 1,323
(*) The financial statements of Varlik Yatirim Ortakligi A.S. are prepared in
accordance with the Capital Market Board Regulations and the financial
statements of TEB Sigorta A.S. are prepared in accordance with Insurance
Supervision Regulations. The current period data is presented as of
December 31, 2002 and the prior period income / loss amounts are presented
with their nominal values as of December 31, 2001.
a.3) Out of Group members / shareholders who has the control power with the
parent company and/or other members of the financial group are explained:
66% shares of the unconsolidated participation Varlik Yatirim Ortakligi
A.S. is publicly traded.
a.4) The reason for not consolidating the unconsolidated participations and the
method of recording the unconsolidated participations at the Parent Bank's
financials: The participation is not consolidated due to materiality
principle, is quoated at the stock exchange and is valued by fair value.
b) Information on the consolidated participations:
b.1) Information on the consolidated participations:
Current Period Prior Period
Balance at the beginning of the period 4,260 4,260
Movements during the period 1,061 -
Purchases 672 -
Free shares obtained profit from current year's share 389 -
Dividends from current year income - -
Sales - -
Revaluation increase - -
Provision for impairment - -
Balance at the end of the period 5,321 4,260
Capital commitments - -
Share percentage at the end of the period (%) %50.00 %50.00
b.2) Valuation of investments made to the consolidated participations:
Current Period Prior Period
Valuation with cost 5,321 4,260
Valuation with fair value - -
Valuation with equity method - -
Total 5,321 4,260
The above mentioned participation is stated at cost at the unconsolidated
financial statement of the Parent Company Bank.
b.3) Sectoral information and the related carrying amounts on consolidated
investments:
Participations Current Period Prior Period
Insurance companies/TEB Sigorta A.S.Sigorta Sirketleri / TEB Sigorta 5,321 4,260
Total 5,321 4,260
b.4) Investments which are quoted to a stock exchange: None.
b.5) Information related to investments that are included in consolidation:
Group's share
Address (City / percentage-If different Group's risk group Method of Consolidation
Description Country)) voting percentage(%) share percentage
(%)
TEB Sigorta A.S. Istanbul / Turkey 50.00 50.00 Full
Since the management of the company is controlled by the Parent Bank, line by
line consolidation method is used.
Information related to investments that are included in consolidation as
presented in table 9. b.5):
Income from Current
Total Marketable Period
Shareholders' Fixed Interest Securities Profit / Prior Fair
Total Equity Assets Income Portfolio Loss Period Value
Assets Profit /
Loss
TEB Sigorta 18,122 4,670 381 139 463 442 709 -
(*) The financial statements of TEB Sigorta A.S. is prepared in accordance with
the principles of Insurance Law and the current year data is stated as of
December 31, 2002 and the previous period data is stated as of December 31,
2001 by their nominal values.
b.6) Information on consolidated investments which are sold in current
period : None.
b.7) Consolidated investments purchased in the current period: None.
10. Information on Subsidiaries (Net):
a) Information on unconsolidated subsidiaries:
TEB Kiymetli Madenler Anonim Sirketi is not included in the consolidation in
accordance with AAR's materiality principle.
a.1) Information on unconsolidated subsidiaries:
Description Address(City/ Country) Group's share percentage-If Group's risk group share
different voting percentage(%) percentage (%)
TEB Kiymetli Madenler A.S. Istanbul/Turkey 66.00 75.00
a.2) Information on subsidiaries as presented in table a.1:
Income from
Marketable Current
Shareholders'Equity(*) Total Fixed Interest Securities Period Prior Fair
Total Assets(*) Income (*) Portfolio (*) Profit / Period Value
Assets Loss (*) Profit / (*)
Loss (*)
280 231 27 - - 40 67 -
(*) From statutory historical financial statements
(**) The subsidiaries TEB Ekonomi Arastirmalari A.S and Factors International
Holding S.A., not included in the consolidation as of December 31, 2001
amounting to TL 9 and TL 466, respectively, are liquidated in 2002.
b) Information on the consolidated subsidiaries
b.1) Information on the consolidated subsidiaries:
Current Period Prior Period
Balance at the beginning of the period 99,219 75,361
Movements during the period 12,307 23,858
Purchases 6,876 149
Free shares obtained profit from current year's share 4,520 20,493
Dividends from current year income - -
Sales - (10)
Revaluation increase (*) 911 3,226
Provision for impairment - -
Balance at the end of the period 111,526 99,219
Capital commitments - -
Share percentage at the end of the period (%)
(*) The exchange income generated from the difference between the devaluation
and inflation of the foreign subsidiaries.
b.2) Valuation of investments made to the consolidated subsidiaries:
Subsidiaries denominated in Turkish Lira are reflected by restating their costs
and the capital increases after deducting the ones generated by means of adding
the values accumulated at the revaluation like funds to the capital of the
subsidiaries with the conversion factors applicable for the relevant dates.
Subsidiaries denominated in foreign currency are translated into Turkish Lira by
applying the exchange rates prevailing at balance sheet dates. When there is a
permanent diminution in value of the subsidiaries then a provision is set.
Current Period Prior Period
Valuation with cost 111,526 99,219
Valuation with fair value - -
Valuation with equity method - -
b.3) Sectoral information on consolidated subsidiaries and the related
carrying amounts:
Current Period Prior Period
Banks / The Economy Bank N.V. 42,973 35,205
Other Financial Sub. / Petek International Holdings B.V. 774 774
TEB Yatirim Men.Deg. A.S. 24,163 20,124
TEB Portfoy Yonetimi A.S. 2,893 2,393
Leasing Companies / TEB Finansal Kiralama A.S. 25,074 25,074
Factoring Companies / TEB Factoring A.S. 15,649 15,649
Total 111,526 99,219
b.4) Consolidated subsidiaries which are quoted to a stock exchange: None.
b.5) Information related to subsidiaries that are included in consolidation:
Group's share Group's risk
Address (City / percentage-If group share Method of
Description Country)) different voting percentage (%) Consolidation
percentage(%)
The Economy Bank N.V. The Netherlands 100.00 - Full
Petek International The Netherlands 100.00 - Full
Holdings B.V.
TEB Yatirim Menkul Istanbul/Turkey 74.80 25.20 Full
Degerler A.S.
TEB Portfoy Yonetimi Istanbul/Turkey 55.89 44.11 Full
A.S.
TEB Finansal Kiralama Istanbul/Turkey 68.76 31.24 Full
A.S.
TEB Factoring A.S. Istanbul/Turkey 65.80 34.20 Full
Information on subsidiaries as presented in table 10. b.5:
Income from Current
Total Marketable Period
Total Shareholders' Fixed Interest Securities Profit / Prior Period Fair
Assets (*) Equity (*) Assets (*) Income (*) Portfolio (*) Loss (*) Profit / Value
Loss (*)
1,219,225 76,746 536 90,850 205 8,112 9,922 -
1,780 1,769 - 3 - 3,262 10,830 -
16,558 13,899 533 916 11,892 2,983 3,289 -
4,202 3,573 682 163 93 876 1,032 -
143,421 32,212 125,541 2,722 143 4,141 (4,067) -
57,395 6,679 196 10,084 812 500 (911) -
(*) From statutory historical financial statements
b.6) Information on the consolidated subsidiaries that were disposed in
current period: None.
b.7) Information on the consolidated subsidiaries purchased in current
period: None.
11. Information on other investments: None.
a) The obligations of the Group relating to the joint ventures, except for the
other obligations, the obligations on capital or share on the capital
obligations among other investors and the Group's share on capital
obligations on other subsidiaries: None
b) Information on joint ventures : None.
c) The Group which does not prepare consolidated financial statements due to
not being a parent company should disclose the information related to joint
ventures in unconsolidated financials : Not applicable.
d) The reason for unconsolidation of the unconsolidated joint ventures and the
recording method of the joint ventures at the unconsolidated financial
statements of the parent company Group is explained: Not applicable.
12. Information on financial lease receivables (Net):
a) Aging of leasing receivables:
Current Period Prior Period
Gross Net Gross Net
Less than 1 year 63,593 55,583 44,394 37,929
Between 1-4 years 29,511 27,737 28,066 24,131
Over 4 years 3,829 1,727 - -
Total 96,933 85,047 72,460 62,060
b) Information on net lease receivables:
Current Period Prior Period
Gross lease receivable 96,933 72,460
Unearned finance income 11,886 10,400
Cancelled lease agreements (-) - -
Net Investment on Financial Lease 85,047 62,060
c) Related to lease agreements, criteria used in determining conditional lease
installments, conditions for renewal or purchasing options and updating
agreement quantities and restrictions on lease agreements, and some points
like, event of being default or not, agreements renewed or not, if renewed
the conditions of the renewal, restrictions of the renewal and general
explanations about other important decisions that are included in leasing
agreement: None.
13. Information on receivables arising from term sales of assets included in
miscellaneous receivables: None.
14. Explanations related to interest and income accruals :
a) Information about accrued interest and income receivables:
Current Period Prior Period
Accrued interest and income receivables TL FC TL FC
Interest accruals - due 228 - 259 4
Interest accruals - not due 9,118 9,816 9,024 25,156
Loan commissions and other income accruals - due - - 1,032 -
Loan commissions and other income accruals - not due 11 1 7 -
Total 9,357 9,817 10,322 25,160
b) Information on other interest and income accruals :
Current Period Prior Period
Other interest and income accruals TL FC TL FC
Trading securities 3,475 112 5,049 1,671
Securities available for sale - 357 317 -
Securities held to maturity 732 68 163 -
Interest accruals of reverse repo transactions - - - -
Interest accruals of reserve deposits 920 247 818 -
Income accruals of financial derivative instruments 3,735 315 682 243
Interest and income accruals - - - -
Income accrual of foreign exchange gains 3,735 315 682 243
Income accruals of financial lease income 132 601 - -
Other 5,722 533 10,755 1,370
Total 14,716 2,233 17,784 3,284
15. Information on fixed assets (Net) :
Land and buildings Leased Vehicles Other tangible fixed Total
fixed assets assets
Prior Period End :
Cost 10,348 27,512 4,666 42,675 85,201
Accumulated depreciation(-) 2,606 13,839 2,537 25,939 44,921
Net book value 7,742 13,673 2,129 16,736 40,280
Current Period End :
Net book value-beginning of 7,742 13,673 2,129 16,736 40,280
period
Additions - 5,489 1,409 8,367 15,265
Disposals(-) - - 109 1,514 1,623
Impairment (*) (625) - - - (625)
Depreciation (-) 225 5,270 918 5,794 12,207
Currency translation - 1 9 10
differences resulting from
foreign investments
Net book value-end of period 8,141 13,892 2,512 17,804 42,349
(*) Allowance for impairment of the buildings of the Parent Bank related to
prior year is reversed since it became not applicable according to the
current expertise report.
a) If an asset impairment amount recorded or reversed in the current period is
important for the general of the financial statements:
a.1) Events and conditions for recording or reversing impairment :
Allowance for impairment of the buildings related to prior year is reversed
since it became not applicable according to the current expertise report.
a.2) Amount of recorded or reversed impairment in the financial statements:
The amount of impairment reversed is TL 625.
b) The diminishing in value amounts set or cancelled in the current period
according to the asset groups, that totals to an amount that effects the
financial statements even though some or each of the amounts are not
important individually and the reason and conditions for this: None
16. Information stated below, should be explained separately for each class of
intangible fixed assets.
a) Useful life or depreciation rates :
The value of the intangible fixed asset subject to depreciation is
distributed systematically to its useful life and the depreciation period,
starting from the effective usage date of the asset is depreciated for its
estimated useful life.
b) Depreciation method : Intangible fixed assets is depreciated by using over,
straight-line method with a rate of 20% over restated book values.
c) Book value and accumulated depreciation amounts at beginning and end of
period :
Current Period Prior Period
Gross Book Value 9,768 7,902
Accumulated Depreciation (5,878) (4,302)
Total 3,890 3,600
d) Movement of intangible assets for the current period:
Current Period
Beginning balance 3,600
Amounts formed internally -
Additions due to mergers, transfers and acquisitions 1,855
Not used and disposed items 1
Increases or decreases in the revaluation fund -
Impairment charges -
Reversal of impairment charges -
Depreciation expenses (-) 1,576
Currency translation differences arising from foreign investments 10
Other differences in book values -
Period end balance 3,890
e) Disclosures for book value, description and remaining depreciation period
for a specific intangible fixed asset that is material to the financial
statements: None.
f) Disclosure for intangible fixed assets acquired through government
incentives and accounted at fair value: None.
g) The method of subsequent remeasurement for intangible fixed assets that are
acquired through government incentives and recorded at fair vale at the
initial recognition : None.
h) The book value of intangible fixed assets that are pledged or restricted
for use : None.
i) Amount of purchase commitments for intangible fixed assets : None.
j) Information on revalued intangible assets according to their types: None.
k) Amount of total research and development expenses recorded in income
statement within the period if any : None.
l) Positive or negative consolidation goodwill that comes from consolidated
parties is explained on related party basis:
Description Cost Depreciation Goodwill
TEB Factoring A.S. 370 222 Positive
m) Information on goodwill:
Current Period
Goodwill arising from consolidation -
From tangible fixed assets -
From intangible assets -
From non-monetary assets 148
Goodwill arising from mergers and acquisitions -
From tangible fixed assets -
From intangible assets -
From non-monetary assets -
n) Reconciliation of movements on goodwill in the current period:
Current Period
Gross value at the beginning of the period 370
Accumulated depreciation (-) 74
Impairment provision (-) -
Movements within the period : -
Additional goodwill -
Corrections arising from the changes in value of assets and liabilities -
Goodwill written off due to the end of an operation in current period or -
complete /partial sale of an asset (-)
Depreciation (-) 148
Impairment provision (-) -
Reversal of impairment provision (-)* -
Other differences occurred in the book value -
Gross value at the end of the period 370
Accumulated depreciation (-) 222
Impairment provision (-) -
o) Reconciliation of movements on negative goodwill in the current period:
Current Period
Gross value at the beginning of the period 569
Accumulated negative goodwill recognized in the income statement -
Period movements : -
Additional negative goodwill -
Corrections arising from the changes in value of assets and liabilities -
Negative goodwill written off due to the end of an operation in current period -
or complete /partial sale of an asset (-)
Negative goodwill recognized in the income statement * 569
Other differences occurred in the book value -
Gross value at the end of the period -
Accumulated negative goodwill recorded as income -
The income booked in accordance with the 16th article of " Accounting of Group
Mergers, Transfers and Acquisition" standard should be disclosed separately.
17. Information on other assets:
a) Information on prepaid expenses, taxes and similar items :
Current Period Prior Period
Deferred tax 2,043 1,955
Assets held for sale - -
Advances given 185 70
Prepaid rent expenses 412 483
Transaction cost related to financial liabilities 2,055 745
Prepaid taxes 10,792 13,526
Financial lease agreements in progress 1,398 -
Leasing primium receivable 13,268 11,269
Other 9,328 11,473
Total 39,481 39,521
b) Other assets and liabilities which exceed 10 % of the balance sheet total
(excluding off-balance sheet commitments) and breakdown of these which
constitute at least 20% of grand total: None
II- Footnotes and Explanations Related to the Consolidated Liabilities
1. a) Information on maturity structure of deposits:
a.1) Current period :
Demand 7 day Call Up to 1 month 1-3 Month 3-6 Month 6 Month-1 1 Year and
Accounts Year over
Saving deposits 17,561 - 78,244 38,485 12,533 3,271 13,469
Foreign currency 457,575 - 1,190,062 355,185 74,685 76,574 163,993
deposits
Residents in 392,526 - 493,206 306,609 29,552 7,069 337
Turkey
Residents abroad 65,049 - 696,856 48,576 45,133 69,505 163,656
Public sector 35 - - - - - -
deposits
Commercial 54,174 - 96,010 4,275 8,508 5 13
deposits
Other 32,758 - 429 14 8 1 -
institutions
deposits
Precious metals 9,714 - - 11,327 - 1,414 -
deposits
InterGroup 19,925 - 69,295 15,221 - 1,000 -
deposits
Central Group of - - - - - - -
Turkey
Domestic Groups 11,028 - - - - 1,000 -
Foreign Groups 8,897 - 69,295 15,221 - - -
Special finance - - - - - - -
houses
Other - - - - - - -
Total 591,742 - 1,434,040 424,507 95,734 82,265 177,475
a.2) Prior period:
Demand 7 day Call Up to 1 1-3 Month 3-6 Month 6 Month-1 1 Year and
Accounts month Year over
Saving deposits 7,138 24,970 63,460 23,278 7,283 4,780 -
Foreign currency 342,472 - 628,577 483,480 125,347 156,814 77,448
deposits
Residents in 300,741 - 419,603 332,222 15,637 7,373 149
Turkey
Residents abroad 41,731 - 208,974 151,258 109,710 149,441 77,299
Public sector 122 - - - - - -
deposits
Commercial 57,555 47,935 15,525 13,735 1,557 3 -
deposits
Other 397 109 378 8 3 154 -
institutions
deposits
Precious metals 6,897 - - 5,384 - 1,985 -
deposits
InterGroup 4,026 - 74,723 11,338 311 - -
deposits
Central Group of - - - - - - -
Turkey
Domestic Groups 274 - 2,617 - - - -
Foreign Groups 3,752 - 72,106 11,338 311 - -
Special finance - - - - - - -
houses
Other - - - - - - -
Total 418,607 73,014 782,663 537,223 134,501 163,736 77,448
b.1) Information on saving deposits under the guarantee of saving deposit
insurance and exceeding the limit of saving deposit insurance:
Under the guarantee of saving deposit Exceeding the limit of
Saving Deposits insurance saving deposit
Current Period Prior Period Current Period Prior Period
Saving deposits 24,368 50,858 139,195 80,051
Foreign currency saving 192,865 232,525 631,402 452,050
deposits
Other deposits in the form 680 922 6,605 5,858
of saving deposits
Foreign branches' deposits - - - -
under foreign authorities'
insurance
Off-shore Grouping regions' - -
deposits under foreign - -
authorities' insurance
Total 217,913 284,305 777,202 537,959
b.2) The Group which has settled abroad should disclose, the total amount of
savings deposit in Turkey branch, and insured in the country of head
office : None
b.3) Saving deposits which are not under the guarantee of deposit insurance
fund : None.
2. Information on funds provided from repurchase agreement transactions:
Current Period Prior Period
TL FC TL FC
From domestic transactions 21,902 - - -
Financial institutions and organizations 13,000 - - -
Other institutions and organizations 4,045 - - -
Real persons 4,857 - - -
From foreign transactions 898 - - -
Financial institutions and organizations - - - -
Other institutions and organizations 897 - - -
Real persons 1 - - -
Total 22,800 - - -
(*) The transactions regarding the repurchase agreements had been followed
as an off-balance sheet item in 2001, as explained in Part IV, footnote 2b
and accordingly, prior period information is not presented.
3. a) Information on funds borrowed:
Current Period Prior Period
TL FC TL FC
Short-term 35,331 269,737 50,362 271,773
Medium and long-term - 87,812 102 123,906
Total 35,331 357,549 50,464 395,679
c) Additional explanations on concentration of the Bank's liabilities:
The Parent Bank's funding resources include customer deposits and loans borrowed
from overseas. As of December 31, 2002 the Bank's foreign funds borrowed
includes USD 100 million of syndicated loan with a maturity of October 30, 2003.
The Parent Bank conducts a fund supplying client concentration analysis as of
efficiency periods based on branches and the Bank in general, and takes short-
term and long-term precautions for distribution of the above mentioned clients
to the Bank's base.
The 71.24% of the bank deposits and 86.68% of the other deposits of the Bank
consists of foreign currency deposits.
4. a) Information on debt securities issued: None.
b) Information on convertible bonds: None.
The explanation, if any correction made on convertibility rate : Not applicable
c) The explanation on the maturity structure, interest rate, type of currency of
the issued marketable securities : None.
5. Explanation on funds: None
6. Explanation on miscellaneous payables:
Current Period Prior Period
Total amount of cash collateral obtained 120 1,060
The table consists of blocked accounts regarding cash collateral, loans, import
and export transactions.
7. Other assets and liabilities which exceed 10 % of the balance sheet total
(excluding off-balance sheet commitments) and breakdown of these which
constitute at least 20% of grand total: None
8. Information on taxes, duties and premium payables:
a) Information on taxes payable :
Current Period Prior Period
Corporate taxes payable - -
Taxation of securities 1,967 2,574
Property tax 119 110
Grouping Insurance Transaction Tax (BITT) 1,574 1526
Foreign Exchange Transaction Tax 527 987
Value Added Tax Payable 44 14
Other 1,637 2,109
Total 5,868 7,320
b) Information on premiums :
Current Period Prior Period
Social Security Premiums-Employee 304 217
Social Security Premiums-Employer 410 303
Group Social Aid Pension Fund Premium-Employee - -
Group Social Aid Pension Fund Premium-Employer 7 7
Pension Fund Membership Fees and Provisions-Employee - -
Pension Fund Membership Fees and Provisions-Employer - -
Unemployment insurance-Employee 21 29
Unemployment insurance-Employer 43 46
Other 105 1
Total 890 603
9. Explanations on factoring payables:
Current Period Prior Period
TL FC TL FC
Domestic - - - -
Short-term 13,104 - - -
Medium and long-term - - - -
Foreign - - - -
Short-term - 14,878 - 11,899
Medium and long-term - - - -
Total 13,104 14,878 - 11,899
10.a)The general explanations on criteria used in determining installments of
financial lease agreements, renewal and purchasing options and restrictions
in the agreements that create significant obligations to the Bank :
In the financial lease agreements, installments are based on useful life, usage
periods and on the basis of Tax Procedural Code.
b) The explanation on modifications in agreements and new obligations that
these modifications cause: None.
c) Explanation on financial lease obligations: None
d) Footnotes and explanations regarding operational leases:
Except for the head-office and Izmir-Konak branch building, all branch premises
of the Parent Bank and the premises of the subsidiaries are leased under
operational leases. As of December 31, 2002, the operating lease expense,
amounting to TL 10,660 was reflected to the income statement. The lease periods
vary between 1 and 10 years and lease agreements are cancelable subject to a
period of notice.
d) Information about sale and lease back transactions : None.
11. Information on interest and expense accruals:
Current Period Prior Period
TL FC TL FC
Accrued interest on deposits 5,300 8,829 6,256 19,383
Accrued interest on funds borrowed 2,061 2,185 2,851 5,172
Accrued interest on bonds - - - -
Accrued interest on repurchase agreement transactions 28 - - 1,048
Accrued interest on derivative financial instruments 4,670 - 542 -
Accrued interest and expense - - - -
Foreign exchange losses accrued 4,670 - 542 -
Other interest and expense accruals 1,004 823 2,787 -
Total 13,063 11,837 12,436 25,603
12. Provisions and subordinated loans :
a) Information on general provisions:
Current Period Prior Period
General provisions 6,093 4,828
Provisions for First Group Loans and Receivables 5,170 4,041
Provisions for Second Group Loans and Receivables 31 15
Provisions for Non Cash Loans 892 772
Others - -
Total 6,093 4,828
b) Information on employee termination benefits and notice indemnity:
5 OD 4 OD 3 OD 2 OD Onceki D. Cari D.
Actual Payments of Employee Termination Benefits 32 56 107 947 662 -
Reserve for Employee Termination Benefits and Notice 723 1,580 3,140 4,456 6,912 10,972
Indemnity
Actual Payment Ratio %4.38 %3.57 %3.40 %21.24 %9.59 %8.44
Ratio of reserve for Employee Termination Benefits and - - - - - %8.44
Notice Indemnity (*)
Possible reserve for Employee Termination Benefits and - - - - - 1,751
Notice Indemnity
(*) 5-year actual payment rate.
As of December 31, 2002, TL 926 of reserve for employee termination benefits and
notice indemnity was reflected to the financial statements of Parent Bank
corresponding to 8.44% of total liability of TL 10,972.
As of December 31, 2002, the Parent Bank provided a reserve of TL 217 for the
unused vacation periods constituting 8.44% of total liability.
The consolidated subsidiaries have calculated reserve for employee termination
benefits and notice indemnity in accordance with the regulations they apply, and
reflected an amount of TL 825 into their financial statements as of December 31,
2002.
c) Liabilities on pension rights: None.
c.1) Liabilities for pension funds established in accordance with "Social
Security Institution": None
c.2) All kinds of liabilities resulting from pension funds, foundations etc,
which provide benefits for the employees after retirement: None.
d) The uncertainties related to the timing of expected payment amount and
nature of provisions :
The nature of provisions is explained in the items a and b. For these
provisions no payment is expected short-term.
e) Information on free reserves for possible losses : None.
f) Amount, quantity, maturity, interest rate, lender name and share certificate
conversion option if any, of subordinated loans:
The Parent Company, the Bank has signed an agreement with the International
Finance Corporation (IFC) on July 17, 2002, for a subordinated loan. The
facility is a US$15 million, subordinated convertible loan, with a maturity of
October 15, 2009 and with an interest rate of LIBOR+4.5%. The loan matches
BRSA's Tier II Capital definitions as well as contributing the Bank's capital
adequacy ratio in a positive manner. The mentioned loan has share convertibility
option.
g) Information on subordinated loans:
Current Period Prior Period
TL FC TL FC
From Domestic Groups - - - -
From Other Domestic Institutions - - - -
From Foreign Groups - - - -
From Other Foreign Institutions - 24,596 - -
13. Information of Shareholders' Equity:
a) Presentation of paid-in capital:
Current Period Prior Period
Common stock 55,125 55,125
Preferred stock - -
b) Paid-in capital amount, explanation as to whether the registered share
capital system is applicable to the Group if so, amount of registered share
capital ceiling :
Capital System Paid-in capital Ceiling
Registered capital system 55,125 100,000
c) Information on share capital increases and their sources; other
information on increased capital shares in current period: None
d) Information on share capital increases from revaluation funds: None.
e) Capital commitments in the last fiscal year and at the end of the
following interim period, the general purpose of these commitments and
projected resources required to meet these commitments : None.
f) Indicators of the Group's income, profit and liquidity for the previous
periods and within these indicators possible affects on capital fore
sighting uncertainty : None.
g) Information on privileged shares :
7 % of the Parent Bank's remaining net income and tax after deducting legal
reserves and first dividends, corresponding to the Group's 60,000 shares of TL
30,000,000 (in full TL) is distributed to the founder shares.
14. a) Common stock issue premiums, shares and equity instruments: None
15. a) Information on marketable securities value increase fund:
Current Period Prior Period
TL FC TL FC
From associates and subsidiaries 201 - - -
From securities available-for-sale - - - -
From securities held for structural position - - - -
Total 201 - - -
There is no value increase generating from foreign currencu marketable
securities.
b) The information on presentation of foreign exchange gains related to
foreign currency participations, subsidiaries, securities available for
sale in the financial statements :
As of December 31, 2002 and 2001, the foreign exchange gains, related to foreign
currency participations, subsidiaries of the Bank, are TL 5,851 and TL 4,587,
respectively. These amounts are reflceted under shareholders' equity as other
reserves.
c) The amount of accumulated exchange difference included in equity coming
from previous periods related to the first time application of "Effects of
Changes in Foreign exchange Rates" standard, except for cases where the
amount could not be identified : None.
16. Information on revaluation fund: None.
17. The explanations on the elements of the revaluation fund are made: None
18. Information on legal reserves:
Current Period Prior Period
First legal reserves 4,410 26,688
Second legal reserves - 26,795
Other legal reserves appropriated in accordance with special legislation - 1,119
Total 4,410 54,602
"Accumulated Deficit" amounting to TL 209,500 as of December 31, 2001, resulting
from inflation accounting application was netted off as TL 254,893 as restated
in the equivalent purchasing power at September 30, 2002, in consecutive order,
from period income, general reserves, legal reserves and effect of inflation
accounting on share capital accounts in accordance with the letter of BRSA dated
July 29, 2002, numbered DZM 2/25-8760 depending on the authorization given to
the Board of Directors by the Annual General Assembly meeting resolution dated
July 10, 2002. Accordingly, the Parent Company Bank does not hold legal reserves
account as of December 31, 2002. The legal reserve amount consists of legal
reserves of consolidated subsidiaries.
19. Information on extraordinary reserves: None.
As mentioned in the note 18, as of December 31, 2002, the Group does not have
any extraordinary reserves.
20. a) Information on minority shares :
Current Period Prior Period
Balance at the beginning of period 18,167 11,204
Net profit share from subsidiaries - -
Prior period dividend 1,079 6,963
Balance at the end of the period 19,246 18,167
b) Information on shareholders having more than 10 % share:
Name/Commercial title Amounts Share Percentage Paid-in capital Unpaid portion
TEB Mali Yatirimlar A.S. 38,631 %70.08 38,631 -
Total 38,631 %70.08 38,631 -
III. Footnotes and Explanations Related to the Consolidated Income Statement
There is no fundamental error for any groups or items related to the prior
period. There is no change in accounting estimates for the fiscal year.
The breakdown of other interest and non-interest income and expense accounts
that exceed 10% of the related totals are shown below.
Other interest expense amounting to TL 30,118 includes interest expense on
marketable securities subject to repurchase agreements for the period from
February 1, 2002, amounting to TL 28,737.
Other fee and commission income amounting to TL 40,129 includes fees and
commissions on brokerage services amounting to TL 10,972, and other fee and
commission expense amounting to TL 12,400 includes fees and commissions on
credit card amounting to TL 5,497.
1. a) Information on interest income received from investments and
subsidiaries: None.
b) Information on financial lease income:
Current Period Prior Period
Financial lease income 22,871 38,743
c) Interest received from reverse repurchase agreement transactions:
Current Period Prior Period
TL FC TL FC
Interest received from reverse repurchase agreement transactions 3,002 - 14,527 -
d) Information on factoring receivables:
Current Period Prior Period
Interest on factoring receivables 11,328 37,884
2. a) Information on interest expense to investments and
subsidiaries: None.
b) Information on financial lease expenses : None.
c) Distribution of interest expense on deposits based on maturity of
deposits :
Time Deposits
Demand Up to 1 Month Up to 3 Up to 6 Up to 1 More than 1
Account name Deposits Months Months Year Year Total
TL
Group deposits 37 16,427 493 - - - 16,957
Saving deposits 32 21,950 12,098 5,129 2,362 1,178 42,749
Public sector 4 - - - - - 4
deposits
Commercial 388 6,158 1,912 2,325 19 2 10,804
deposits
Other deposits 1 134 2 4 14 - 155
7 days call - 28,228 - - - - 28,228
accounts
Total 462 72,897 14,505 7,458 2,395 1,180 98,897
FC
Foreign 4,104 55,054 10,788 3,678 4,939 10,774 89,337
currency
deposits (*)
7 days call - - - - - - 0
accounts
Precious metal - 40 88 - 18 - 146
deposits
Total 4,104 55,094 10,876 3,678 4,957 10,774 89,483
Total 4,566 127,991 25,381 11,136 7,352 11,954 188,380
(*) Interest expense on foreign currency demand deposits includes TL 624 of
foreign Bank deposits interest expense.
b) Interest expense on repurchase agreements :
Current Period Prior Period(*)
TL FC TL FC
Interest expense on repurchase agreements 28,737 - - -
(*) Since interest on repurchase agreements are included in the Uniform Chart of
Accounts after February 1, 2002, the information for prior period is not
presented.
e) Information about interest expense on factoring payables: None.
3. Net income/losses from marketable securities for investment purposes: None
4. Information on other operating income :
The information on the factors affecting the Group's income including
extraordinary items and new developments, and the explanation on nature and
amount of income earned from extraordinary items : None.
5. Provision expenses of Groups for loans and other receivables:
Current Period Prior Period
Specific provisions for loans and other receivables 12,279 7,832
Unsecured - 4,719
Other groups 12,279 3,113
General provision expenses 3,896 2,132
Marketable securities impairment expense 280 2,206
Provision for impairment* - -
Other - -
Total 16,455 12,170
(*) Provision for impairment related to participations, subsidiaries and
securities held to maturity
6.a) Information related to other operational expenses:
Current Period Prior Period
Personnel expenses 57,990 61,092
Reserve for employee termination benefits 1,238 1,753
Provision for social aid fund deficits - -
Depreciation expense of fixed assets 12,207 14,727
Amortization expense of intangible assets 1,573 1,768
Other operating expenses 34,262 45,963
Maintenance expenses 1,029 2,190
Advertisement expenses 4,252 4,692
Other expenses 28,981 39,081
Loss on sales of assets 34 -
Operational lease expenses 10,660 12,205
Other (*) 25,916 20,001
Total 143,880 157,509
(*) Saving Deposits Insurance Funds premium amounting of TL 8,898 is
included in other operating expenses
b) The nature and amount of extraordinary expenses and current period, tax
expenses on extraordinary items: None.
c) Information on Goodwill:
c.1) Income statement item including goodwill and amortization: It is
included in the current period other operating expenses.
c.2) If present, it is stated that the negative goodwill is determined in
accordance with the principles in Communique 16 of AAR related to
"Acquisition and Merger of Groups and Acquisitions of Subsidiaries", the
timing and amount of expected expenses and losses, the periods when the
negative goodwill will be recorded as income and the income statement
accounts in which it will be recorded: The negative goodwill generated
from monatery items amounting to TL 569 is recorded as income under other
operating income accounts.
7.a) Income and expenses relating to investments and subsidiaries: None.
a) The information on income and expense from related party transactions: None.
b) The information on income and expense from related party transactions:
The Group has certain Grouping transactions with group companies. These are
commercial transactions, which are realized in line with market rates. These are
reflected in income statement. The related amounts are presented in Part XI.
8. Income and expenses from unconsolidated subsidiaries and participations:
Unconsolidated subsidiaries and participations Current Period Prior Period
Profit / Loss Profit / Loss
TEB Kiymetli Madenler A.S. 40 67
Varlik Yatirim Ortakligi A.S. 55 365
9. The explanations on net income / loss for the period:
a) The nature and amount of certain income and expense items from ordinary
operations is disclosed if the disclosure for nature, amount and repetition
rate of such items is required for a complete understanding of the Group's
performance for the period : None.
b) Effect of changes in accounting estimates on income statement for the current
and, if any for subsequent periods : None.
c) Income/loss related to minority shares:
Current Period Prior Period
Income and loss related to minority shares 1,018 (7,366)
10. Nature and amount of changes in accounting estimates, which have a material
effects on current period or expected to have a material effect on
subsequent periods : None.
IV. Footnotes and Explanations Related to the Consolidated Off-balance Sheet
Commitments
1.a) Disclosure to be made separately from other contingent liabilities:
a.1) The Group's share in contingent liabilities of joint ventures together
with other ventures : None.
a.2) Share of joint ventures in their own contingent liabilities: None.
a.3) The Group's contingent liabilities resulting obligations of other ventures
in joint ventures : None.
b) Accounting and presentation of contingent assets and liabilities in the
financial statements :
b.1) For contingent assets, if realization probability is close to certain, then
it is accounted. If realization probability is low, then it is explained in
the footnotes. As of December 31, 2002 there are no contingent assets
needed to be explained.
b.2) For contingent liabilities, if realization probability is close to certain,
then provision is set. If there is low or no realization probability, then
it is explained in the footnotes : None.
2. Information related to derivative financial instruments :
Derivative transactions according to purposes
Trading Hedging
Current Period Prior Period Current Period Prior Period
Types of trading transactions
Foreign currency related
derivative transactions:
Forward FC transactions 259,011 228,949 - -
FC swap transactions 305,032 29,109 -
Futures FC transactions - - - -
Option FC transactions - - - -
Total of FC derivative 564,043 258,058 - -
transactions (I)
Interest related derivative
transactions :
Interest rate swap transactions - - - -
Forward rate agreements - - - -
Interest option transactions - - - -
Other interest agreements - - - -
Futures interest transactions - - - -
Interest option transactions - - - -
Total of interest derivative - - - -
transactions (II)
Total trading derivative 564,043 258,058
transactions (I+II)
Types of hedging transactions
Fair value hedges(2):
Futures currency transactions - - - -
Swap interest transactions - - - -
Total - - - -
Cash flow hedges (3):
Swap currency transactions - - - -
Currency call options - - - -
Total - - - -
Total hedging related - - - -
derivatives (4).
Total Derivative Transactions 564,043 258,058 - -
(1) Share change in convertible bonds
(2) Derivative transactions arranged for protection from the fair value risk
(3) Derivative transactions arranged for protection from cash flow risk
(4) Derivative transactions arranged for protection from total risk
Related to agreements of forward transactions and options; the information based
on the type of forward and options transactions are disclosed separately,
specified with related amounts, type of agreement, purpose of transaction,
nature of risk, strategy of risk management, hedging relationship, possible
affects on the Group's financial position, time of cash flow, reasons of
unrealized transactions which previously projected to be realized, income and
expenses that could not be linked to income statement in the fiscal year because
of the agreements :
As of December 31, 2002, the Group has no option contracts. The Group's forward
foreign exchange and swap transactions agreements are based on protection from
interest and currency fluctuations. According to AAR, they do not qualify as
hedging instruments and are remeasured at fair value. Breakdown of the
Group's foreign currency forward and swap transactions based on currencies are
disclosed below in their TL equivalents :
FORWARD FORWARD SWAP SWAP
BUY SELL BUY SELL
Current Period
TRL 21,004 61,531 - -
USD 63,276 36,236 143,249 8,102
EURO 43,105 21,858 8,595 126,513
Other 574 11,427 - 18,573
Total 127,959 131,052 151,844 153,188
Prior Period
TRL 5,375 7,479 - -
USD 65,504 43,839 14,467 -
EURO 35,112 56,676 - 12,755
Other 8,489 6,475 - 1,887
Total 114,480 114,469 14,467 14,642
TL 47,128 of forward transactions for the current period are commitments from
arbitrage transactions. Maturities of the outstanding agreements vary between
January 2003 and October 2003.
3. Information on off-balance sheet commitments :
a) Nature and amount of irrevocable loan commitments: As of 31 December 2002
and 2001, credit card spending limit commitments are TL 67,335 and
TL 63,971, respectively.
b) Nature and amount of contingent loss and commitments from off-balance sheet
items including below statements:
The Group, within the context of Grouping activities, undertakes certain
commitments, consisting of loan commitments, letters of guarantee, acceptance
credits and letters of credit.
b.1) Non-cash loans including guarantees, acceptances, financial collaterals
and other letters of credits:
As of December 31, 2002 total guarantees and commitments consist of letter
of guarantees amounting to TL 580,633, acceptances amounting to TL 40,361
and letters of credit amounting to TL 321,987.
b.2) Guarantees, surety ships and similar transactions : There are other
commitments and contingencies amounting TL 9,066 other than the ones
explained in article b.1).
4. Concentration of off-balance sheet commitments: Sectoral concentration is
disclosed in Section 8.a. The information requested in this article will be
reported after January 1, 2004.
5.a) Non-cash loans:
Current Period Prior Period
Guarantees given against cash loans 59,951 119,238
With maturity of 1 year or less than 1 year 22,463 77,311
With maturity of more than 1 year 37,488 41,927
Other non-cash loans 892,096 744,848
Total 952,047 864,086
b) Collateral, mortgage and other restrictions on tangible fixed assets, the
amount of capital expenditures related to expenses construction of tangible
fixed assets, intangible fixed asset purchase commitments: None.
6. Custodian and intermediary services :
The Group provides trading and custodian services in the name and account of
third parties. The nominal values of the custody and pledged items of the third
parties, agencies and managers under the custodian of the Bank are TL 1,544,435
(TL - 1,185,674 ) and billions of EURO 40,2 (2001 - billions of EURO 1,468)
respectively as of December 2002 and 2001.
1. The information on the Group's rating by in the international rating
introductions :
The results of the trading performed by Moody's Investor Services and Fitch
Ratings are shown below:
Moody's Investor Services: January 2002
Group Financial Strength D+
Long Term FX Deposits B3
Fitch Ratings: July 2002
Foreign Currency Commitments
Long Term B
View Stable
Turkish Lira Commitments
Long Term B
View Stable
National
Long Term A (tur)
View Stable
Individual Rating C/D
Support Points 4T
8.a) Sectoral breakdown of non-cash loans :
Current Period Prior Period
TL (%) FC (%) TL (%) FC (%)
Agricultural 5,903 2.23 16,249 2.36 2,339 0.95 13,344 2.13
Farming and Raising 3,579 1.35 5,631 0.81 671 0.28 5,410 0.86
livestock
Forestry 2,306 0.87 10,618 1.55 1,641 0.69 7,934 1.26
Fishing 18 0.01 - - 27 0.01 - -
Manufacturing 174,368 65.82 375,129 54.59 157,859 66.77 307,095 48.93
Mining 3,577 1.36 10,471 1.52 167 0.07 2,791 0.44
Production 167,122 63.08 360,027 52.4 154,479 65.34 301,073 47.97
Electric, gas and water 3,669 1.38 4,631 0.67 3,213 1.36 3,231 0.51
Construction 14,081 5.32 5,353 0.78 8,895 3.76 5,799 0.92
Services 67,619 25.52 224,758 32.71 65,322 27.63 196,573 31.32
Wholesale and retail 38,315 14.46 57,084 8.31 27,705 11.72 20,834 3.32
trade
Hotel, food and 256 0.10 4,079 0.59 56 0.02 920 0.15
beverage services
Transportation and 3.65 1.52
telecommunication 9,680 10,464 6,906 2.92 24,957 3.98
Financial institutions 16,443 6.21 146,275 21.29 22,180 9.38 140,341 22.36
Real estate and renting 1,689 0.64 6,127 0.89 5,948 2.52 4,532 0.72
services
Self-employment 103 0.04 - - 1,270 0.54 1,403 0.22
services
Education services 92 0.03 - - 56 0.02 873 0.14
Health and social 1,041 0.39 729 0.11 1,201 0.51 2,713 0.43
services
Other 2,957 1.12 65,630 9.55 2,000 0.85 104,860 16.71
Total 264,928 100.00 687,119 100.00 236,415 100.00 627,671 100.00
b) Information about non-cash loans in Group I and II :
I st Group - Standard loans and other II nd Group - Loans and other
receivables receivables under close follow-up
Noncash loans TL FC TL FC
Letters of guarantee 264,814 315,819
Group acceptances - 40,361 - -
Letters of credit 72 321,915 - -
Endorsements - - - -
Underwriting commitments - - - -
Other commitments and 42 9,024 - -
contingencies
Total 264,928 687,119 - -
The Group provided TL 303 of reserve for non-cash loans amounting to TL 1,300.
V. Footnotes and Explanations Related to the Consolidated Statement of
Changes in Shareholders' Equity
1. Explanations on the adjustments made in the current period related to the
first time application of Accounting Standards on Financial Instruments:
a) There are no increases resulting from securities available for sale.
Gain or loss generated from remeasurement of securities included in
shareholders' equity in the current period available for sale, excluding those
related to hedging : None.
b) Increase in cash flow risk hedging items: None.
c) Reconciliation of beginning and ending balances of the foreign currency
differences :
The foreign currency increases regarding the consolidated subsidiaries of the
Group are TL 5,851 and TL 4,587 as of December 31, 2002 and 2001, respectively.
These are stated under the shareholders' equity, as income reserves.
2. Explanations on the adjustments made in the current period regarding the
application of Accounting Standard on Financial Instruments: None.
a) Information on securities available for sale: None.
Amount of gain/loss, recorded in income statement resulting from remeasurement
of securities available for sale ( except the risk hedging securities ) at fair
value, which was previously recorded in shareholders' equity : None.
b) Information on cash flow hedges: None.
Amount of gain/loss recorded in income statement resulting from remeasurement of
hedged assets and liabilities in cash flow hedges, which was previously recorded
in shareholders' equity.
3. Information on dividend:
a) Dividends declared subsequent to the balance sheet date, but before the
announcement of the financial statements: None.
b) Dividends per share proposed subsequent to the balance sheet date: Profit
appropriation is resolved on General Assembly meeting of the Parent Bank,
dated March 27, 2002, and it is decided to distribute TL 276 (in full TL)
per share to the shareholders.
4. Amounts transferred to legal reserves: The Parent Company, the Bank does
not have any legal reserves at its financials as of December 31, 2002. The
legal reserves amounting TL 4,410 in the consolidated fianancial statements
are transferred from participations and subsidiaries.
5. Information on shares issued:
a) The Bank explains the rights, priorities and restrictions regarding all the
capital share classes including the distribution of income and repayment of
the capital: None.
VI. Footnotes and Explanations Related to the Consolidated Statement of Cash
Flows
1. The effects of the other items stated in the cash flow statement and the
changes in foreign currency exchange rates on cash and cash equivalents:
Cash Flow Statement, Explanation of Item 1.1.9 Current Period Prior Period
Net monetary gain / loss (51,541) (112,261)
Fees and commissions given (14,287) (18,250)
Other operating expenses (70,798) (78,169)
Foreign exchange gain / loss (net) (4,576) (21,137)
Total (141,202) (229,817)
Total cash out flow for prepaid taxes and prepaid expenses included in other
assets is TL 4,177. Cash out flow in the other liabilities relate to
miscellaneous payables.
The effect of changes in foreign exchange rates on cash and cash equivalents.
The effect of changes in foreign exchange rates on cash and cash equivalents and
the unrealized gain/loss on the other non-monetary items are reflected at the
relevant section in the statement of cash flows.
2. Cash flows related to acquisition of participations, subsidiaries and other
investments: None
3. Information on disposals of the participations, subsidiaries and other
investments: None
4. Cash and cash equivalents at beginning and end of periods:
The reconciliation of the components of cash and cash equivalents, accounting
policies used to determine these components, the effect of any change made in
accounting principle in the current period, the recorded amounts of the cash and
cash equivalent assets at the balance sheet and the recorded amounts in the cash
flow statement:
Current Period Prior Period
Cash 86,776 183,238
Cash equivalents 1,777,522 1,211,097
Total 1,864,298 1,394,335
Cash includes of cash in TL and cash in foreign currency, cash equivalents
include the balances of the Central Bank, Banks and interbank funds sold which
mature in less than three months.
5. Amount of cash and cash equivalents restricted for the usage of the Group
and the shareholders by legal limitations and other reasons: None
6. a.Amount of unused borrowing facilities that can be used in funding banking
operations and fulfillment of capital obligations and limitations related
to these, if any: None
b. The share of the Group in banking, investment and financing operations of
the joint ventures that are consolidated on a pro-rata basis: Not
applicable
c. Total cash flows required to increase the capacity of banking operations,
apart from the required cash flows for maintaining current banking
operation capacity: None.
VII. Footnotes and Explanations Related to Mergers, Aquisitions of Banks, and
the Recording Principles of Aquisitions of Subsidiaries:
There are no issues to be disclosed related to mergers and acquisitions.
VIII.Footnotes and Explanations Related to the Risk Group of the Parent Bank
1. Volume of The Bank's risk group transactions, income and expense amounts
involved and outstanding loan and deposit balances :
a) Current Period :
Bank's Risk Group Investments and Direct and indirect Other entities included in
(*) subsidiaries shareholders of the Group related parties
Cash Non-cash Cash Non-cash Cash Non-cash
Loans and other
receivables
Balance at beginning - - 21,505 1,198 107,876 5,739
of period
Balance at end of - - 100,979 6,730 10,154 3,716
period
Interest and - - 4,344 457 10,466 547
commission income
b) Prior Period :
Bank's Risk Group Investments and Direct and indirect Other entities included in
(*) subsidiaries shareholders of the Group related parties
Cash Non-cash Cash Non-cash Cash Non-cash
Loans and other
receivables
Balance at beginning - - 142,580 1,468 120,627 13,649
of period
Balance at end of - - 21,505 1,198 107,876 5,739
period
Interest and - - 15,288 11 21,852 123
commission income
c.1) Information on Bank's Risk Group deposits balances:
Bank's Risk Group Investments and Direct and indirect Other entities included in
(*) subsidiaries shareholders of the Group related parties
Deposits Current period Prior Current period Prior Current Prior
period period period period
Balance at - - 59,391 38,069 325,547 390,613
beginning of period
Balance at end of - - 187,125 59,391 772,930 337,256
period
Interest on - - 3,057 9,570 44,652 44,605
deposits
c.2) Information on forward and option agreements and other similar
agreements made with related parties :
Bank's Risk Group Investments and subsidiaries Direct and indirect Other entities included in
(*) shareholders of the Group related parties
Current period Prior Current Prior Current Prior
period period period period period
Trading transactions
Beginning of period - - 23,168 30,798 15,676 1,623,999
End of period - - 43,311 23,168 24,485 15,676
Total income/loss - - (344) 48 618 (73)
Hedging transactions
purposes
Beginning of period - - - - - -
End of period - - - - - -
Total income/loss - - (344) 48 618 (73)
(*) The scope of the related parties are defined in the Article 20-2 of the
"Regulation on the Establishment and Operations of Groups".
2. Disclosures for related parties
a) The relations of the Group with the entities controlled by the Group and
its related parties, regardless of whether there are any transactions or not:
The Parent Company Bank enters into banking transactions with group companies in
accordance with the Banking Law. These are commercial transactions and realized
on an arms-length basis.
b) Besides the structure of relationship, nature of the transaction, amount
and ratio to the total volume of transactions, amount of major items and
ratio to all items, pricing policies and other factors:
Amount % According to the Amounts at the Financial Statements
Securities held to maturity - -
Cash loans 111,133 8.46
Noncash loans 11,103 11.66
Deposits 960,055 34.21
Forward transactions and option agreements 67,796 15.97
Other receivables - -
These transactions are priced in accordance with the general pricing policies of
the Bank and are in line with market rates.
c) In the case that disclosing items separately, total of similar items
is disclosed in order to present the total impact on financial statements :
Explained in the article b.
d) Investments accounted for under the equity method : None.
e) Disclosures related to purchase and sale of real estate and other
assets, trading of services, agency contracts, leasing contracts,
transferring information as a result of research and development, license
contracts, financing (loans and cash or real capital supports included),
guarantees, and management contracts :
The Group has financial lease agreements with TEB Finansal Kiralama A.S.. The
total leasing obligations related to these agreements amounted to TL 6,784.
Additionally, the Group provides agency services for TEB Sigorta A.S. and TEB
Yatirim Menkul Degerler A.S.
Within the limits of the Grouping Law, the Group renders cash and
non-cash loans to its related parties and the ratio of these to the Group's
total cash and non-cash loan portfolio is 5.39 %. Amounts of these loans are
explained in the note 1a.
As of December 31, 2002 the Group has no purchases and sale of real
estate and other assets, transfer of information as a result of research and
development, license and management contracts with the related parties.
IX- Footenotes and Explanations Related to Inflation Accounting
Inflation Accounting
The accompanying financial statements are prepared by applying inflation
accounting to the financial statements, which are prepared on a historical cost
basis, except for the revaluation of fixed assets in line with Turkish Tax
Legislation, in accordance with the provisions of Communique No : 14 "Accounting
Standard Related to the Preparation of Financial Statements in Hyperinflationary
Periods" related to ARR. Communique No:14 requires Groups to restate their
financials in the equivalent purchasing power of Turkish Lira at the balance
sheet date. One characteristic that necessitates the application of inflation
accounting under the provisions of Communique No : 14 is a cumulative three-year
inflation rate approaching or exceeding 100%. As of December 31, 2002 based on
the wholesale price indices announced by the State Institute of Statistics, the
cumulative three-year inflation rate in Turkey is 227.3%.
Communique No:14 requires that the financial statements should be restated in
the equivalent purchasing power at the balance sheet date and the financial
statements of prior year should be restated in their entirety to the measuring
unit current at the balance sheet date.
The main guidelines for inflation accounting are as follows:
Cash and monetary assets and liabilities, which maintain their nominal balances
but experience a decline in purchasing power are not restated because they are
already expressed in terms of the monetary unit current at that balance sheet
date.
Non-monetary assets and liabilities which are not carried at amounts current at
the balance sheet date and other components of shareholders' equity (except for
the revaluation surplus which is eliminated) are restated by applying the
relevant conversion factors; being the change in the general price index from
the date of acquisition to the closing date. The inflation adjusted share
capital amount has been derived by indexing each capital increase other than
bonus shares from statutory revaluation fund from the date they were
contributed. Transfers to share capital from general reserves, gain on sale of
property and investments and inappropriate profits are considered as cash
contributions and are restated from the date of contribution.
Fixed assets subject to depreciation are restated from their historical
acquisition costs after eliminating the statutory revaluation increments.
Depreciation is not separately restated in the income statement since it is
computed over restated amounts.
Non-monetary items reflected at current values are not restated since they are
already stated in the current purchasing power.
Investments and subsidiaries denominated in Turkish Lira are reflected at
restated costs by converting historical acquisition costs, excluding free shares
from revaluation fund, with the relevant conversion factors. Transfers to share
capital from general reserves, gain on sale of property and investments and
inappropriate profits are considered as cash contributions and are restated from
the date of contribution. Investments and subsidiaries denominated in foreign
currency are converted to Turkish Lira with the exchange rates prevailing and
year-end.
All items in the statements of income are restated by applying the appropriate
conversion factors.
The effect of inflation on the Group's net monetary position is included in the
statements of income and separately disclosed as a net monetary gain or loss.
The effect of inflation accounting on prior year financial statements in
included in retained earnings and the effect of restatement is disclosed
separately under shareholders' equity.
Indices and conversion factors that are used to restate the accompanying the
financial statements as of December 31, 2002, reflecting the restatement for the
changes in the general purchasing power of the Turkish is as follows;
Dates Index Conversion Factors
December 31, 2002 6,478.8 1.000
December 31, 2001 4,951.7 1.308
December 31, 2000 2,626.0 2.467
Restatement of balance sheet and income statement items through the use of a
general price index and relevant conversion factors does not necessarily mean
that the Group could realize or settle the same values of assets and liabilities
as indicated in the balance sheets. Similarly, it does not necessarily mean that
the Group could return or settle the same values of equity to its shareholders.
In accordance with Communique No :14, the Group obtains expertise reports for
its buildings.
The total amount of legal reserves and general reserves are TL 5,146 and TL
28,769, respectively, in the Bank's statutory books of account.
Prior year financial statements were subject to special independent audit in
accordance with the temporary article 4 of the Grouping Law no. 4389.
Income statement items do not have seasonality. However, restatement of income
statement items were made with monthly indices.
X- The Information on the Parent Bank's Domestic, Foreign, Off-shore Branches
and Foreign Representatives
Information relating to the domestic, foreign, offshore branches and foreign
representatives of the Group:
Number of
Employees
Number
Domestic branch 74 1,673
Country of Incorporation
Foreign representatives - - -
Total Statutory Share
Assets Capital
Foreign branch - - - - -
Offshore Grouping region
branches - - - - -
XI- Explanations Related to Subsequent Events
a) Disclosure related to subsequent events and their impact on the financial
statements as required by the related standard.
a.1) As of January 1, 2003 retirement pay liability ceiling was increased
to TL 1.324.
a.2) The Parent Bank has established a branch in Bahrain in an offshore
Bank status based on the permission of the Under secretariat of Treasury
to the Prime Ministry of Turkish Republic and the branch has started
operations in March 2003.
a.3) Profit appropriation is resolved on the General Assembly meeting of
the Parent Company, the Bank, dated March 27, 2002, and it is decided to
distirbute TL 276 full per share to the shareholders.
b) The impact of significant changes in foreign exchange rates subsequent to
the balance sheet date on the foreign currency transactions, items and on
the financial statements of the Group : There are no significant changes.
SECTION SIX
OTHER FOOTNOTES AND EXPLANATIONS
I- Other Explanations Regarding the Parent Bank
Matters required to be disclosed due to having a significant effect on the
financial statements or for the purpose of clarification of the balance sheet :
21 branches have been acquired from KentGroup (a Group under control of Saving
Deposits Insurance Fund) in January 2002, and 3 branches have been acquired from
ToprakGroup (a Group under control of Saving Deposits Insurance Fund) in October
2002.
SECTION SEVEN
REPORT OF INDEPENDENT AUDITORS
I. Explanations on the Report of Independent Auditors:
The consolidated financial statements of the Group were audited by Guney Serbest
Muhasebeci Mali Musavirlik A.S. (An Affiliated Firm of Ernst &Young
International) and the report of independent auditors, dated March 27, 2003,
including an unqualified opinion is presented preceding the consolidated
financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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